 "Flipkart")
E-commerce giant Flipkart has raised nearly $600 million in fresh funds from parent company Walmart and another investor, signalling a slow return of large deal momentum amid tight liquidity conditions and a global economic slowdown, according to people familiar with the matter.
This is the first major fundraise for the Bengaluru-based firm since 2021, when it raised $3.6 billion from investors including SoftBank and Walmart, valuing the company at $37.6 billion.
SoftBank has exited the firm.
According to sources, the latest financing is likely to value the firm at a 5-10 per cent premium to its previous valuation of $33 billion. The new valuation may cross $40 billion.
Flipkart’s valuation had been adjusted to $33 billion after fintech firm PhonePe was separated from the group in December 2022. Industry sources said Flipkart was in talks with investors to raise a total funding round of about $1 billion.
“The company plans to deploy the capital to expand its infrastructure and seller support ecosystem and the latest technologies such as artificial intelligence (AI) and generative AI,” said a person familiar with the matter.
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Flipkart confirmed the fund infusion but didn’t comment on the capital the firm planned to raise.
This fundraise will give enough firepower to Flipkart to counter competition from Amazon, Mukesh Ambani-owned Reliance JioMart, and Tata Digital. It would also help the company tap the next 200 million customers in the country, especially in Tier-II and -III cities and Bharat (rural India), according to people familiar with the company’s strategy.
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 in the home-grown e-commerce company at a valuation of less than $21 billion.
Fintech firm PhonePe came to Walmart as part of the acquisition. After that, Walmart continued to participate in the funding rounds of Flipkart and PhonePe.
Such financing is signalling a slow return of deal momentum amid tight liquidity conditions and a global economic slowdown, according to analysts. Flipkart’s funding round is one of the largest raised by a company in a single round for 2023.
Udaan, India’s largest business-to-business (B2B) e-commerce firm, recently raised $340 million in Series E financing.
Fintech firm PhonePe got up $850 million this year, and that included a single round of $350 million from General Atlantic in January and a subsequent funding of $100 million in May.
Eyewear startup Lenskart rang in $500 million from the Abu Dhabi Investment Authority in March and $100 million from ChrysCapital in June.
Ola Electric raised $380 million in October, although $240 million of this comprised debt.
A record 1.4 billion customers visited Flipkart’s platform during its flagship festival sales event “The Big Billion Days' (TBBD) 2023”. The event, which started on October 8 (with early access for VIP and Plus customers from October 7) and ended on October 15, received a great response from both customers and an extensive network of sellers across the country.
However, soon after that, the e-commerce firm’s growing losses drew attention. Flipkart India reported a 45 per cent increase in net loss at Rs 4,890.6 crore during 2022-23 as against Rs 3,371.2 crore in the previous financial year, according to the data accessed by business intelligence platform Tofler.
The Walmart-owned company’s consolidated revenues in 2022-23 were at Rs 56,013 crore, a 9 per cent jump over the revenues in the previous financial year.
The firm’s expenses for the financial year were reported at Rs 60,858 crore, an increase of 11.5 per cent from Rs 54,580 crore in the previous one. This included costs such as the purchase of stock in trade, employee-benefit expenses, and those related to finance.
