Wal-Mart Stores, Inc. (NYSE:WMT) May Invest $1 Billion In India’s Flipkart

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Wal-Mart Stores, Inc. (NYSE:WMT) is interested in buying a small stake in India’s internet retailer Flipkart and the two companies are already in discussions, people familiar with the matter have said. Flipkart is one of India’s fastest-growing homegrown e-commerce companies. The other is Snapdeal.

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Up to $1 billion investment

According to sources, Wal-Mart is considering an investment in the range of $750 million to $1 billion in Flipkart. However, because the talks are still in progress, the actual value and size of Wal-Mart’s investment could vary. Nevertheless, the investment that Wal-Mart may make in Flipkart will only give it a minority stake in the Indian e-commerce firm.

Though Flipkart was reported to be worth $15 billion sometime last year, its valuation has recently been cited at $11.5 billion. Intense competition and investor outflow are cited to be some of the reasons behind the drop in Flipkart’s valuation.

“Companies like Walmart would be more long-term investors, but there aren’t too many like them to write such big checks,” said one of the sources.

A partnership deal

Other than direct financial investment, sources have also revealed that Wal-Mart and Flipkart are mulling a partnership. If the partnership deal works out, the companies hope to share their unique capabilities to improve their market share and sales in the Indian market.

Though Wal-Mart already has a presence in India through its Wal-Mart In India division, its operations are currently limited to wholesale business. However, with Amazon aggressively expanding in India’s retail market, Wal-Mart also wants to have a share of India’s rapidly expanding retail industry.

The rise of Flipkart

Flipkart, which launched in 2007, deals in a wide range of retail products from cosmetics to suitcases. Institutional investors in the Indian e-commerce firm include Accel Partners and Tiger Global Management. Flipkart was created by two ex-Amazon employees, but now it is facing competition from the deep-pocketed Amazon.

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