On May 9, India’s ecommerce leader Flipkart announced acquisition of 77 percent of its stake by US-based retail giant Walmart for a whopping $16 billion. In what is now the world’s largest ecommerce deal, questions were raised about SoftBank’s role from now on. Reports suggested that SoftBank had not made a final decision about whether or not it wanted to stay with Flipkart.
The Japanese investor, which held 21 percent stake in Flipkart, has finally said that it is selling its entire stake in Flipkart to Walmart. Various reports quote SoftBank’s spokesperson’s only statement: “SoftBank confirms the sale of its entire stake in Flipkart to Walmart.”
Flipkart was SoftBank’s latest big bet in India after Ola, Paytm Mall, Grofers, OYO Rooms, and Snapdeal among others. They invested more than $2 billion in Flipkart less than a year ago, which comes back to them as $4 billion after the Walmart buyout.
SoftBank founder Masayoshi Son seems to have decided to focus on the exit it can get now, rather than wait for an IPO over the years. With Snapdeal and Housing.com earlier, Son has burnt his hands after all.
Interestingly, it was Son who let the cat out of the bag on May 9, during the firm's earnings call. He confirmed that Walmart is acquiring majority stake in Flipkart, before either Flipkart or Walmart could make the official announcement.
From day one, Walmart has been keen on getting a majority stake in Flipkart so as to experiment with retail in India. In fact, out of Walmart’s $16 billion investment, only $2 billion is the actual investment in the company. Rest of the money was spent to buy out other stakeholders. eBay, which became a part of the Flipkart Group last year, will be exiting along with multiple other investors, earning more than $1 billion from selling its stake to Walmart.
(Early Flipkart backers Tiger Global and Accel Partners, and more recent investors like Tencent and Microsoft have retained some shares. Tiger and Tencent will continue to hold board seats.) Flipkart’s co-founder Sachin Bansal has also left the firm for good, as his co-founder and now Flipkart Group CEO Binny Bansal chose to continue.
Coincidentally, Amazon India is also valued at $16 billion, and is reportedly looking to buy stake in retail chain Future Group.