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Is Walmart Getting Closer to a Stake in India’s Flipkart?

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Walmart eyes major stake

Walmart (WMT) is pushing hard to gain a stake in India’s leading e-commerce company, Fipkart.com. According to a Times of India report, the world’s largest retailer is planning to spend $5 billion to $10 billion to acquire a large share in Flipkart. The report said that Walmart might double the valuation of Flipkart (close to $20 billion) as the company pushes hard to take on Amazon both in the US and in international markets.

Earlier, the news was rife that Walmart is seeking a “significant minority stake” of about 15% to 20% in India’s largest e-commerce company. The deal between the two is expected by March. Currently, SoftBank remains Flipkart’s largest shareholder, followed by Tiger Global and Naspers.

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Walmart’s digital push shaping up well

Walmart is investing heavily in its digital business to strengthen its competitive position against rival Amazon (AMZN). Walmart’s digital push got a significant boost with the acquisition of Jet.com. The company’s digital sales are booming and are one of the key drivers of its recent turnaround thanks to the acquisition of several small fast-growing e-commerce businesses, the roll-out of numerous customer-friendly initiatives, value pricing, and improved merchandising.

If the deal goes through, Flipkart could prove to be another significant growth engine for Walmart and solidify its position against Amazon in the e-commerce space. India’s fast-growing economy, rising middle-class income, and the government’s digital push could support this growth.

Rival Amazon has already gained a strong foothold in India’s e-commerce market and is presenting cutthroat competition to Flipkart. Besides, the company has pledged to invest about $5 billion in India. Meanwhile, Alibaba (BABA) has also made several small investments in fast-growing e-commerce startups in India.

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