Soft- Bank's Vision Fund, the world's biggest private equity fund, had invested $2.5 billion in Flipkart last August. Additionally, Walmart will also be supporting Flipkart's ambition to transition into a publicly-listed, majority-owned subsidiary in the future. Even so, the company would retain clear majority ownership. Son was touting his company's gains from companies it had invested in. Wal-Mart is talking about buying about 70 percent stake in Indian company. Sachin Bansal will sell his entire stake to Walmart while Binny Bansal will sell part of his to the American retailer, The Economic Times reported on Tuesday.
Indian tax authorities are said to be closely watching the Walmart-Flipkart deal and may look to slap a 20 per cent withholding tax on what appears to be an offshore transaction, rekindling memories of the controversial Vodafone-Hutchison deal in 2007. That could help ease concerns by Indian regulators.
Here's how the structure of Walmart and Flipkart deal looks like.
Walmart shares slumped more than 4 per cent in the morning trade today wiping off almost Dollars 10 billion from its market capitalisation, hours after the retail giant announced USD 16 billion worth Flipkart deal.
The journey of Flipkart started when two IIT-Delhi graduates left their jobs at Amazon to pursue entrepreneurial dreams. E-commerce sales in India hit $21 billion a year ago according to market research company Forrester, and are expected to soar as its population of 1.25 billion people make greater use of internet access.
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Those figures are drastically higher than other social media services, such as Twitter and Instagram (also owned by Facebook). However, the company is accused of selling data of millions of Facebook users without their permission.
The exit from Flipkart comes soon after Naspers raised $9.8 billion by selling a 2% stake in China's Tencent Holdings. "This is a time-consuming process and both these companies need patient capital to capture the online retail opportunity".
Get latest news & live updates on the go on your pc with. Finally, the deal was confirmed by Masayoshi Son of Japanese investor, Softbank, which holds a 23% stake in Flipkart. Flipkart's supply chain arm, eKart, serves more than 800 cities, making 500,000 deliveries daily. They've gained about 12 percent over the past year.
Walmart executives said they were particularly interested in PhonePe, Flipkart's mobile payments app, along with its fashion sites Myntra and Jabong.
Amazon has long considered India one of its most important overseas markets. The board will work to maintain Flipkart's core values and entrepreneurial spirit, while ensuring it has strategic and competitive advantages, Walmart said in the release.
Walmart has 21 wholesale cash-and-carry stores across India, having failed in previous attempts to enter the country's retail marketplace.
Walmart India's current president and CEO, Krish Iyer, would remain in his role.