Flipkart said on Monday it has raised $3.6 billion at a post-money valuation of $37.6 billion in what is widely believed to be the pre-IPO round for the Indian e-commerce conglomerate as it works to list in the public markets as soon as early next year.
The new round of funding — by far the largest for any Indian startup — was led by GIC, Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2 and Walmart, along with investments from sovereign funds DisruptAD, Qatar Investment Authority, Khazanah Nasional Berhad, Tencent, Willoughby Capital, Antara Capital, Franklin Templeton and Tiger Global.
The Monday investment marks the return of SoftBank as a shareholder of Flipkart. SoftBank, which had taken the exit from the startup when the Bangalore-based firm sold majority stakes to Walmart in 2018 at a valuation of $22 billion, has reinvested about $500 million in the new round.
“At Flipkart, we are committed to transforming the consumer internet ecosystem in India and providing consumers access and value. 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 at Flipkart Group, in a statement.
“As we serve our consumers, we will focus on accelerating growth for millions of small and medium Indian businesses, including kiranas. We will continue to invest in new categories and leverage made-in-India technology to transform consumer experiences and develop a world-class supply chain.”
As part of the new fundraise, Flipkart is also giving its employees the option to sell their stock options worth $80.5 million, Krishnamurthy told them on Monday.
Flipkart had originally hit the market to raise money early this year and was initially looking to raise just about $1 billion, TechCrunch first reported.
The Bangalore-headquartered firm competes neck to neck with Amazon in India. The American e-commerce group has invested over $6.5 billion in the South Asian market.
Both the firms are struggling to aggressively expand their footprint in India, where physical stores continue to drive the vast majority of retail sales. They are also expected to be severely hit by India’s new e-commerce rules.
E-commerce platform JioMart, a joint venture between Reliance Retail (India’s largest retail chain) and Google and Facebook-backed Jio Platforms (India’s largest telecom operator), launched last year in over 200 cities and towns across the nation.
At stake is one of the world’s fastest-growing e-commerce markets that is poised to grow even further as more first-time internet users begin to shop online. India’s e-commerce market is estimated to reach more than 300 million shoppers by 2025, according to estimates by Bain & Company. These shoppers would have bought items worth more than $100 billion from online platforms, the firm projected.
In recent years, Flipkart and Amazon have made a number of bets to expand their reach in India. Both of them have rolled out support for Hindi language (Flipkart has added several additional Indian languages as well), and partnered with neighborhood stores.
“Flipkart is a great business whose growth and potential mirrors that of India as a whole — that’s why we invested in 2018 and why we continue to invest today,” said Judith McKenna, President and CEO of Walmart International, in a statement.
Flipkart says it has amassed over 350 million registered users across its services — including fashion e-commerce Myntra — in the country. “Flipkart’s logistics and supply chain arm, Ekart, employs more than 100,000 people and makes deliveries to more than 90% of the addressable pin-codes in India, which, coupled with strategic warehouse infrastructure investments, is one of the group’s core strengths. Venturing into the social commerce space, Flipkart recently announced the launch of Shopsy, which will encourage local entrepreneurship,” the firm said.