Flipkart in talks to raise $3.97 billion from investors including GIC, SoftBank: Sources

Flipkart plans to raise the additional capital ahead of an initial public offering, now planned for next year.
Flipkart plans to raise the additional capital ahead of an initial public offering, now planned for next year.PHOTO: FLIPKART/FACEBOOK

MUMBAI (BLOOMBERG) - Flipkart, the Indian e-commerce giant controlled by Walmart, is in talks to raise at least US$3 billion (S$3.97 billion) from investors including SoftBank Group and several sovereign wealth funds, according to sources familiar with the matter.

The start-up is targeting a valuation of about US$40 billion and is in discussions with Singapore's GIC, Canada Pension Plan Investment Board and the Abu Dhabi Investment Authority, said the sources, asking not to be named because the discussions are private.

Japan's SoftBank, which had previously backed Flipkart before selling its stake to Walmart, could invest US$300 million to US$500 million of the total through its Vision Fund II, one of the sources said.

Flipkart plans to raise the additional capital ahead of an initial public offering (IPO), now planned for next year, the sources said.

The company had targeted an IPO as soon as the fourth quarter of this year, but those plans have been delayed by the coronavirus resurgence in India.

The fund-raising discussions are not yet finalised and could still change, the sources added.

SoftBank and GIC declined to comment, while Flipkart did not immediately respond to requests for comment.

The e-commerce market has boomed over the past 18 months, one of the clear beneficiaries of the Covid-19 pandemic. Shares of Amazon.com, which competes with Flipkart in India, soared more than 70 per cent during that period to a market value of US$1.6 trillion. One of the most successful IPOs this year was South Korea's Coupang, another SoftBank-backed e-commerce provider.

India has enormous potential for growth, as demonstrated during the pandemic. The population of 1.3 billion is rapidly adopting digital technologies as the standard of living rises, while traditional retailers are not as established as in markets like the United States.

That has helped fuel the interest in Flipkart from investors at the targeted US$40 billion valuation. If the company makes its debut in the public markets next year as planned, it could be the largest IPO of an Indian start-up.

The deal would mark an unlikely return for SoftBank. The Japanese company agreed to sell its stake in Flipkart to Walmart in 2018, reaping a profit of about US$1.5 billion in the span of a year.

Flipkart was founded in 2007 by two former Amazon engineers and acquired by Walmart 11 years later in the American retailer's largest acquisition ever. Walmart has since invested more than US$1.5 billion in the retail platform, at the same time Amazon has pumped billions into its local business.

Today, Flipkart includes the fashion retailer Myntra and Flipkart Wholesale, its digital marketplace targeted at small and medium-sized businesses. Flipkart also owns a substantial stake in digital payments provider PhonePe.

Since the beginning of the pandemic, Flipkart and its peers have expanded further into smaller Indian cities. The online retailer is increasingly seeing first-time Internet users shop on Indian language versions of its service - it currently offers 11 languages - and also voice-enabled shopping.

Annual revenues are at about US$15 billion, according to one of the sources, driven mostly by sales of electronics and fashion but, increasingly, also home furnishings, healthcare and groceries.

The potential funding could help Flipkart invest in its supply chain, technology and possible acquisitions as it battles rising competition.

Besides Amazon, a pair of domestic entrants, BigBasket and JioMart are backed by two of the country's most powerful conglomerates, Reliance Industries (JioMart) and Tata Group (BigBasket).