While the final nuances of the deal by Flipkart and Wal Mart are still awaited, Wal Mart is paying $16 billion for a 77% stake in Flipkart.
Flipkart sells consumer goods ranging from soaps to smartphones and clothes, and gives Walmart access to an e-commerce market that could be worth $200 billion a year within a decade, according to Morgan Stanley. "We are also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners". Soft- Bank's Vision Fund, the world's biggest private equity fund, had invested $2.5 billion in Flipkart last August.
Foreign retailers, including Walmart, have faced years of political resistance to opening outlets in India, where mom-and-pop store owners wield enormous influence.
Walmart's business in India had previously been focused on small businesses. It was valued at about $12 billion past year, according to researcher CB Insights. It is unclear what Flipkart will do with eBay's India unit which it had continued to run independently. Amazon made its bid for a bulk stake in Flipkart. After that, she lost her leadership position in electronic sales.
Flipkart's parent firm has reportedly posted loss of Rs 8,771 crore for the financial year ending March 2017.
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Additionally, many geographies in developing regions are moving from mostly agrarian-based economies to ones that are heavily industrialized and supported by growing cities: As many as 65 million people are moving to cities every year.
The Arkansas-based retailing behemoth, which reported total revenues of $500 billion in 2018, will now become the largest shareholder in the Flipkart Group which was built by Sachin Bansal and Binny Bansal in 2007 and currently operates through five entities registered in India and four in Singapore.
"We believe there is huge growth potential for e-commerce in India and significant opportunity for multiple players to succeed in India's diverse, domestic market", the company added in its statement.
The acquisition, amounting to $16 billion, is the costliest ever in the e-commerce sector.
"This investment aligns with our strategy, and our goal is to contribute to India's success story as we grow our business", said Judith McKenna, president and CEO of Walmart International.
In its annual report released in February, eBay Inc. said it had recorded gains of $167 million by selling its India unit to Flipkart and investing in the homegrown e-tailer. Plans call for Tencent and Tiger Global to continue on the Flipkart board, joined by new members from Walmart.