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Eying rising competition, Flipkart raises $3.6 bn; SoftBank returns

Flipkart Group comprises e-commerce marketplace Flipkart, online fashion retailer Myntra, fin-tech firm PhonePe, Flipkart Wholesale and online travel portal Cleartrip.

Written by Pranav Mukul | New Delhi |
Updated: July 13, 2021 10:25:27 am
flipkart, klipkart news, flipkart valuation, flipkart net worthThe logo of India's e-commerce firm Flipkart is seen in this illustration picture taken January 29, 2019. (REUTERS)

At a time when the draft e-commerce rules have ushered in greater regulatory uncertainty in the online retail sector, the Bengaluru-headquartered Flipkart Group has raised $3.6 billion from marquee investors fetching it a valuation of $36.7 billion. This is nearly double the $20.8 billion valuation at which the world’s largest retailer Walmart acquired Flipkart in 2018. The fundraise adds to Flipkart’s war-chest when it faces fierce competition in the Indian online commerce segment from Amazon, in addition to other business houses like Reliance and Tata Group looking for their share in the e-commerce pie.

A key aspect of Flipkart’s fundraise is that it marks the re-entry of Japanese Softbank Group into the company, which had divested its stake in the company during the Walmart acquisition. Alongside Softbank, the funding round was led by Singapore’s GIC, Canada Pension Plan Investment Board and Walmart, and it was joined by investments from sovereign wealth funds including Abu Dhabi’s DisruptAD, Qatar Investment Authority and Malaysia’s Khazanah National Berhad. Other marquee investors such as Tencent, Willoughby Capital, Antara Capital, Franklin Templeton and Tiger Global also participated in the funding round.

Flipkart Group comprises e-commerce marketplace Flipkart, online fashion retailer Myntra, fin-tech firm PhonePe, Flipkart Wholesale and online travel portal Cleartrip.

Also, the consumer affairs ministry last month announced the draft e-commerce rules as part of the consumer protection law that online marketplace players suggest has added uncertainty to the sector and triggered fresh regulatory confusion among the companies. The government has had several rounds of discussions with the companies since the announcement of draft rules on June 21, and expects stakeholders to submit their comments by July 21. Sector experts have also pointed out that the e-commerce rules specifically impact foreign players, which operate on a marketplace model.

In the Indian e-commerce market, which is around 5% of the country’s $880-billion retail sector, Amazon and Flipkart are neck-to-neck each having leads in different categories. Over the last few years, Reliance Industries, which owns India’s largest retailer Reliance Retail and the Tata Group have marked their foray into the online retail segment as well. Reliance Retail along with its sister concern Jio Platforms launched e-commerce platform JioMart last year in more than 200 cities. Similarly, the Tata Group, which operates several retail brands such as Croma, Westside, Tata Cliq, etc has bought stakes in online grocer BigBasket and online pharmacy 1mg in its efforts to create a commerce super-app in India.

In its statement announcing the fundraise, Flipkart said that it has 350 million registered users in India and more than 300,000 registered sellers — 60% of which are from tier 2 cities and beyond. “A key focus area for the Group is to help informal commerce segments leverage the power of technology. As one of the leaders in the fashion segment, this means working with the fashion industry and helping small businesses explore untapped opportunities that technology presents. Through its expanding grocery and last-mile delivery programs, the Group will also work with kiranas to help them digitize and grow,” the Flipkart Group said, outlining a goal that is similar to JioMart’s aim to digitise mom and pop grocery stores in the country using WhatsApp.

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