Flipkart raises USD 3.6 bn funding from GIC, SoftBank, Walmart and others, valuation hits USD 37.6 bn

Tencent Holdings Ltd, Blackstone Group-backed Antara Capital, Abu Dhabi's sovereign fund ADQ, Qatar Investment Authority and Canada Pension Plan Investment Board (CPP Investments) participated in the funding round, Flipkart said in a statement. 

The fresh funding ahead of a market-speculated IPO of Flipkart gives it the firepower to take on competition from well capitalised rivals such as Amazon Inc, billionaire Mukesh Ambani's JioMart, and the Tata Group. 

While details about the investment made by these entities individually were not disclosed, sources said SoftBank has pumped in about USD 500 million. In a separate statement, CPP Investments said it has invested USD 800 million (about Rs 5,968 crore) in the Flipkart Group. 

According to sources, Flipkart will also undertake a buyback of employee stock options (ESOPs) worth about Rs 600 crore. 

Flipkart had raised USD 1.2 billion in a round led by Walmart last year that gave the company a valuation of USD 24.9 billion. Walmart, which had in 2018 had invested USD 16 billion for acquiring a 77 per cent stake in Flipkart, is now estimated to hold about 74 per cent in the firm. 

In its statement on Monday, Flipkart said the current funding round has seen participation from sovereign funds DisruptAD, Khazanah Nasional Berhad as well as marquee investors Willoughby Capital, Franklin Templeton and Tiger Global and that it valued the Flipkart Group at USD 37.6 billion post-money. 

Flipkart will continue to make deeper investments across people, technology, supply chain and infrastructure to address the requirements of a rapidly growing consumer base in the country, it added. 

With this deal, SoftBank is re-entering Flipkart's cap table. SoftBank had sold its approximately 20 per cent share when Walmart bought a 77 per cent stake in Flipkart for USD 16 billion in 2018. 

''This (latest) investment by leading global investors reflects the promise of digital commerce in India and their belief in Flipkart's capabilities to maximise this potential for all stakeholders. As we serve our consumers, we will focus on accelerating growth for millions of small and medium Indian businesses, including kiranas,'' Flipkart Group Chief Executive Officer Kalyan Krishnamurthy said. 

He added that Flipkart will continue to invest in new categories and leverage made-in-India technology to transform consumer experiences and develop a world-class supply chain. 

Post this round, Flipkart now ranks among the top 10 tally of global e-commerce companies in terms of market cap. This list includes names like Amazon, Alibaba and Shopify, among others. 

Founded in 2007, the Flipkart Group includes Flipkart, fashion specialty site Myntra and Ekart (logistics and supply chain arm). The Group is also a majority shareholder in digital payments platform, PhonePe. 

E-commerce has witnessed massive growth in the country over the past few years. The pandemic has further bolstered growth as containment measures introduced millions to the convenience of online shopping, while prompting seasoned online shoppers to buy more. 

Social distancing compulsions, massive smartphone base and reliable broadband have galvanised e-commerce uptake beyond metros, deep into smaller cities and towns. E-commerce platforms are ramping up capacities and hiring aggressively to cater to the growth in order volumes. 

Flipkart is reportedly working towards an initial public offering (IPO), even though the company has not revealed a specific timeline for the same. 

The development comes at a time when the government is proposing stricter guidelines for e-commerce players. Ban on fraudulent flash sales, mis-selling and appointment of chief compliance officer/grievance redressal officer are among key amendments proposed to the Consumer Protection (E-Commerce) Rules, 2020. 

Flipkart, along with rival Amazon are also facing a probe by fair trade watchdog CCI that is looking into complaints alleging that these platforms promote select sellers on their marketplace platforms and that deep discounts have stifled competition. 

Flipkart, in its statement on Monday, said a key focus area for the Group is to help informal commerce segments leverage the power of technology. 

''As one of the leaders in the fashion segment, this means working with the fashion industry and helping small businesses explore untapped opportunities that technology presents. Through its expanding grocery and last-mile delivery programs, the Group will also work with kiranas to help them digitise and grow,'' it added. 

Talking about SoftBank's funding in Flipkart, SoftBank Investment Advisers Partner Lydia Jett said SoftBank's re-investment in Flipkart is driven by its experience with and conviction in the company's management team to continue addressing the needs of the Indian consumer in the decades to come. ''...SoftBank has a broad lens on the fundamental trends shaping digital commerce in the region. The opportunity to meet consumer demand for high-quality selection at low prices and a young population make online consumption critical to India's quest for the 'USD 5 trillion economy' that Flipkart's growth story has been enabling,” Jett added. 

Judith McKenna, President and CEO of Walmart International, pointed out that Flipkart has continued to innovate in the categories and services Indian customers want most, creating new jobs and growth opportunities for Indian entrepreneurs and small businesses alongside them. 

With more than 350 million registered users from across the country, Flipkart has been investing in key categories, including fashion, travel and grocery. Venturing into the social commerce space, Flipkart recently announced the launch of Shopsy that will encourage local entrepreneurship. 

More than 3 lakh registered sellers from across the country are on Flipkart's marketplace, and 60 per cent are from tier II cities and beyond. Flipkart also works with more than 1.6 million kiranas in India through its wholesale business and its last-mile delivery programme. 

JP Morgan Securities (Asia Pacific) Limited and Goldman Sachs & Co LLC served as placement agents to Flipkart in connection with this transaction, Hogan Lovells and Shardul Amarchand Mangaldas & Co served as legal counsel.