Google invests $350 mn in Flipkart as part of $1 billion funding round

Fundraise to help e-com major, which is eyeing $60 bn valuation at the time of IPO

Tech major Google is investing nearly $350 million in Walmart-owned e-commerce firm Flipkart for a minority share, according to sources. The investment is part of the $1 billion funding round started by Flipkart in 2023.

Walmart-backed Flipkart disclosed neither how much Google had invested, nor the company’s valuations.
 

“As part of the latest funding round led by Walmart, Flipkart today (Friday) announced that it will be adding Google as a minority investor, subject to receipt of regulatory and other customary approvals by both parties,” said the statement.
 

The funding will help the firm as it is eyeing a valuation of approximately $60 billion at the time of its initial public offering (IPO), 

now planned for 2025-26 instead of this year, according to people familiar with the matter. The firm might consider listing in India and other geographies, including the US.
 

According to sources, the latest financing is likely to value the Bengaluru-based firm at a 5-10 per cent premium to its previous valuation of $33 billion.
 

The new valuation may cross $36 billion. Flipkart’s valuation had been adjusted to $33 billion after fintech firm PhonePe was separated from the group in December 2022.   

“Google did the deal as Flipkart is leading in the e-commerce sector. The company plans to deploy the capital to expand its infrastructure and the seller support ecosystem and the latest technologies such as artificial intelligence (AI) and generative AI,” said a person familiar with the matter. 

Flipkart had earlier raised nearly $600 million from parent company Walmart.

As part of the deal, Google will provide Flipkart its Cloud offer. The collaboration will advance the modernisation of its digital infrastructure to serve customers across the country, said the firm’s statement.

This fundraise will give enough firepower to Flipkart to counter competition from Amazon, Reliance JioMart, and Tata Digital.

It will also help the company tap the next 200 million customers in the country, especially in Tier-II and -III cities and rural India, according to people familiar with the company’s strategy.

This is another major fundraise for the firm since 2021, when Flipkart Group (including PhonePe) raised $3.6 billion.

In July 2020, Walmart led a $1.2 billion round in Flipkart, valuing the e-commerce firm at $24.9 billion.

In May 2018, Walmart announced it would pay $16 billion for an initial stake of approximately 77 per cent at a valuation of less than $21 billion.

Fintech firm PhonePe came to Walmart as a bolt-on acquisition. After that, Walmart continued to participate in the funding rounds of Flipkart and PhonePe.

Flipkart is reportedly planning to move its domicile back from Singapore to India, according to industry sources. This may provide a significant tax gain for the Indian government. Moving domicile to India is linked to eventual IPO plans.

According to analysts, India’s e-tailing sector is poised to experience fivefold growth, from $59 billion in 2022 to an estimated $300 billion by 2030, fuelled by value-seeking “mass” consumers. They attribute this to a burgeoning adoption of e-commerce in Tier-II cities and beyond.

Flipkart is latching on to this trend. A record 1.4 billion customers visited its platform during its flagship festival sales event The Big Billion Days 2023.

“We’re exploring what the right time for the IPO would be. There’s strong growth in Flipkart and in PhonePe and we’re excited about the Indian market,” a Walmart executive told analysts after announcing the company’s results on May 16.

Google is investing $10 billion in India’s digitisation fund, its Chief Executive Officer Sundar Pichai told Prime Minister Narendra Modi last year.