This year, Walmart displayed its strong commitment to the Indian market by investing $3.5 billion to acquire shares from select Flipkart stakeholders and settle liabilities with certain PhonePe shareholders. This strategic move showcases Walmart’s unwavering faith in India, particularly at a time when its primary global rival, Amazon, is reducing its spending in the South Asian market.
This substantial $3.5 billion expenditure occurred during the first half of 2023, as revealed in a recent SEC filing by Walmart. As a result of these investments, Walmart now holds approximately 80% ownership in Flipkart.
Notable investors who divested their stakes in Flipkart this year include Tiger Global, Accel, and Flipkart co-founder Binny Bansal, as indicated in a prior Flipkart filing. Tiger Global had previously disclosed a remarkable gain of $3.5 billion from its $1.2 billion investment in Flipkart, marking a significant triumph in the South Asian market.
Walmart, which also holds the majority of PhonePe and has committed over $20 billion to both businesses, is intensifying its focus on Indian e-commerce and payment platforms. This expansion comes at a time when numerous other companies, including Amazon, are scaling down their investments.
To put this into perspective, Amazon’s plan for its e-commerce platform in India over the next seven years involves an investment of less than $2.5 billion.
In contrast, Amazon, having already invested over $11 billion in its e-commerce and AWS divisions in India over the past decade, intends to allocate an additional $15 billion by 2030. Of this $15 billion, $12.7 billion has been earmarked for its cloud business.
During an earnings call the previous month, Walmart’s CFO, John David Rainey, praised the continued growth of both PhonePe and Flipkart. He stated, “Flipkart delivered strong GMV and net sales growth as the core business continues to grow well. The team continues to work on expanding the ecosystem of product and services like advertising, travel, and healthcare, and on delivering continued contribution profit improvement. Flipkart’s consistent progress and performance reinforces our confidence in the long-term value of this business.”
India has become a pivotal battleground for global corporations, all vying to tap into the potential of its billion-strong customer base.
As stated in a recent fund letter by Baron Capital, “India is the new China and the fastest-growing major economy in the coming decade and beyond. We believe India offers the most attractive long-term investment appeal in our universe. Economic reforms, digitization, formalization, and rising credit penetration favor the most sophisticated, best-managed, public corporations.”
PhonePe, having separated from Flipkart, has attracted $850 million in new investments in recent quarters from various investors, including General Atlantic, Tiger Global, and Walmart.
