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May 25, 2024

Google Invests $350 Million in Flipkart as Part of $1 Billion Funding Round

Tech giant Google is set to invest approximately $350 million in Walmart-owned e-commerce company Flipkart, according to sources. This investment forms a significant portion of the $1 billion funding round initiated by Flipkart in 2023.

Walmart-backed Flipkart did not disclose the specific amount of Google’s investment or the company’s overall valuation. In a statement, Flipkart announced that Google would become a minority investor, contingent upon regulatory and customary approvals by both parties.

The funding aims to bolster Flipkart as it targets a valuation of around $60 billion in anticipation of its initial public offering (IPO), now slated for 2025-26 instead of the initially planned 2024. The firm is considering listing in India and other international markets, including the US.

Industry insiders suggest that this latest financing round will likely value Flipkart at a 5-10% premium over its previous valuation of $33 billion, potentially pushing its new valuation above $36 billion. Flipkart’s valuation was adjusted to $33 billion following the separation of fintech firm PhonePe from the group in December 2022.

“Google decided to invest because Flipkart is a leader in the e-commerce sector,” noted a source familiar with the deal. “The company intends to use the capital to expand its infrastructure, enhance the seller support ecosystem, and integrate advanced technologies like artificial intelligence (AI) and generative AI.”

Prior to this, Flipkart raised nearly $600 million from its parent company, Walmart. As part of the new deal, Google will provide Flipkart with its Cloud services, which will aid in the modernization of Flipkart’s digital infrastructure to better serve customers across India, according to Flipkart’s statement.

This injection of funds will empower Flipkart to effectively compete with major players like Amazon,

Reliance JioMart, and Tata Digital. It will also help the company reach an additional 200 million customers, particularly in Tier-II and Tier-III cities and rural areas of India, aligning with the company’s strategic objectives.

This funding round is one of the most substantial for Flipkart since 2021, when the Flipkart Group, including PhonePe, raised $3.6 billion. In July 2020, Walmart led a $1.2 billion funding round in Flipkart, which valued the company at $24.9 billion. In May 2018, Walmart acquired an initial stake of approximately 77% in Flipkart for $16 billion, valuing the company at less than $21 billion. PhonePe was included in this acquisition as a bolt-on. Since then, Walmart has consistently participated in the funding rounds of both Flipkart and PhonePe.

Reports indicate that Flipkart is considering relocating its domicile from Singapore back to India. This move could result in significant tax benefits for the Indian government and is linked to Flipkart’s IPO plans.

Analysts project that India’s e-tailing sector will experience a fivefold increase, growing from $59 billion in 2022 to an estimated $300 billion by 2030. This growth is driven by value-seeking mass consumers and the increasing adoption of e-commerce in Tier-II cities and beyond. Flipkart is capitalizing on this trend, having attracted a record 1.4 billion visits during its flagship festival sales event, The Big Billion Days 2023.

“We’re evaluating the optimal timing for the IPO,” a Walmart executive told analysts following the company’s results announcement on May 16. “There’s robust growth in both Flipkart and PhonePe, and we’re enthusiastic about the Indian market.”

With Google’s substantial investment and strategic support, Flipkart is well-positioned to enhance its market leadership and drive significant growth in India’s booming e-commerce sector.

Jhumpa Lahiri

Jhumpa Lahiri

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