This story was first published on the Benzinga India portal.
Retail giant Walmart Inc WMT recently spent $1.4 billion (INR 115.15 billion) to purchase the remaining Flipkart shares from Tiger Global, boosting its stake in the Indian e-commerce startup. This transaction has allowed New York-based hedge fund Tiger Global to make a $3.5 billion (INR 287.8 billion) profit from an initial investment of $1.2 billion (INR 98.71 billion), according to a WSJ report.
Tiger Global has now mostly cashed out its Flipkart shares.
What Happened? Out of all the Indian startups Tiger Global has invested in, Flipkart was the only one that saw an investment of over $1 billion from the firm. All in all, Tiger Global has invested more than $6 billion in Indian startups.
The recent purchase of secondary shares has placed a $35 billion value on Flipkart. Even though it was valued at $37.6 billion in 2021, the split from payment startup PhonePe has led to an internal reduction of its worth by around $5 billion.
In 2018, Walmart bought a 77% stake in Flipkart for $16 billion, which decreased to 72% last year according to a market analysis by Tracxn. Before this transaction, Tiger Global owned a 4% stake in Flipkart.
Why It Matters? Seen from another angle, Walmart’s over $20 billion investment in Flipkart shows its commitment to compete with Amazon.com Inc’s AMZN local division, which managed to establish a similar business for less than $7 billion.
Despite a drop in its valuation and the depletion of its capital raised in 2021, Flipkart will likely continue seeking funds, possibly turning back to Walmart to secure most of the financing for its next round.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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