Flipkart's valuation crosses $37.6 bn after raising $3.6 bn in funding

Flipkart is now among the 10 largest e-commerce companies in the world by valuation, according to experts

E-commerce giant Flipkart Group has carved a niche for itself in the global league by raising $3.6 billion, including from SoftBank, which had exited the firm, valuing the company at $37.6 billion, which is more than a 50 per cent rise in a year.

Last July Walmart led a $1.2-billion round in Flipkart, valuing the e-commerce firm at $24.9 billion.

The funding, by far the largest by any in the Indian start-up ecosystem, was led by financial investors GIC, Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2, and Walmart, along with investment from sovereign funds DisruptAD, the Qatar Investment Authority, and Khazanah Nasional Berhad.

Other marquee investors are Tencent, Willoughby Capital, Antara Capital, Franklin Templeton, and Tiger Global.

This fund raise will give enough firepower to Flipkart to counter competition from Amazon, Mukesh Ambani-owned Reliance JioMart, and Tata Digital, which recently made its foray into the area by acquiring a controlling stake in BigBasket.

The new financing round makes Flipkart among the 10 largest e-commerce companies in the world by valuation. The list includes players such as Amazon, Alibaba, Shopify, Garena, and Pinduoduo. The other such companies include Jingdong Mall, MercadoLibre, Coupang and JD Health, said analysts.

Industry executives said the funding would provide leverage for Flipkart’s plans to go public in the US by 2022.

They said it would set the stage for Flipkart’s initial public offering (IPO) and increase its valuation to $50-60 billion. Before this funding deal, sources said, Flipkart was eyeing a valuation of about $40 billion for the IPO.

People in the know said Flipkart was expected to file Form S-1 this year. That is used by companies planning to go public to register their securities with the US Securities and Exchange Commission (SEC).

The rise in valuation also shows the growth of the Indian ecommerce footprint, which was reiterated by the company.

“This 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,” said Kalyan Krishnamurthy, chief executive officer (CEO), Flipkart Group.

With this development, Flipkart will continue to make deeper investment in people, technologies, supply chains, and infrastructure to address the requirements of a rapidly growing consumer base in India.

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, Flipkart said this meant working with the fashion industry and helping small businesses explore untapped opportunities that technology presents. Through its expanding grocery and last-mile delivery programmes, the group will also work with kiranas to help them digitise and grow.

“We will focus on accelerating growth for millions of small and medium Indian businesses, including kiranas,” said Krishnamurthy.

Agus Tandiono, managing director, head of fundamental equities Asia, CPP Investments, said the organisation believed India would be a leading source of global growth in the decades ahead, supported by positive demographics, a growing middle class, and deepening Internet penetration.

According to sources, Flipkart is offering a wealth creation opportunity where employees will have the option to liquidate their vested Esops (employees stock ownership plan) in the buyback worth Rs 600 crore.

Masayoshi Son-led SoftBank is investing in Flipkart three years after it sold its stake in the company to Walmart Inc, the world’s largest retailer. Before its exit in 2018, SoftBank had invested $2.5 billion in Flipkart, according to sources.

Lydia Jett, partner, SoftBank Investment Advisers, said the Japanese outfit’s re-investment in Flipkart was driven by its experience with and conviction in the company’s management team.

Judith McKenna, president and CEO, Walmart International, said Flipkart was a great business whose growth and potential mirrored that of India as a whole.

“Kalyan (Krishnamurthy) and the team have put the Indian customer at the centre of everything and they have continued to innovate in the categories and services Indian customers want most …,” said McKenna.

Sukumar Rajah, director of portfolio management, Franklin Templeton Emerging Markets Equity, said: “We are optimistic about the growth prospects of e-commerce and digitisation in India and believe Flipkart is well-positioned to benefit from this growth.”

With more than 350 million registered users in the country, Flipkart has been investing in key categories, including fashion, travel and grocery.