The summer of 2018 brought along the hottest deal of the year. In May, the American brick and mortar biggie Walmart signed up to acquire a controlling stake in India’s largest e-commerce company Flipkart in an eye-popping $16-billion deal. If fund-raising from marquee foreign investors was defining the start-up space in the country so far, the Walmart-Flipkart deal took the definition to another level, valuing the Sachin Bansal and Binny Bansal-founded company at around $21 billion. The investor markdowns of the past months were washed away in a single stroke, establishing firmly the worth of the business that was started by two IIT graduates in 2007 by selling books online.
The deal also meant Walmart had reconciled with the idea that its wait for foreign direct investment in multi-brand retail (physical retail formats such as supercentres) to sell directly to the Indian masses was turning futile and that the best way to tap the promising market was through online. The American behemoth also managed to get another job done—heating up competition for Amazon, its rival in the US. In return, not only has the poster boy of Indian e-tail become Walmart for all practical purposes, the entire online shopping ecosystem is now being guided by the deep pockets of two American majors.
Shareholders of Walmart have, however, been worried ever since the announcement, questioning the logic of investing so much in a loss-making entity. If that kept Walmart on tenterhooks soon after the champagne sessions at Flipkart townhalls had ended, the Bansals’ exit gave the fairy tale valuation story another twist. While Sachin Bansal, the face of Flipkart for years, had to unceremoniously leave the company as a result of the deal, the other co-founder Binny too had to step down months later over allegations of personal misconduct.