Tiger Global presently owns around 4% of Flipkart, compared to Accel’s slightly more than 1% ownership. Walmart’s share in Flipkart will rise from its existing 72% holding if a deal is finalized.
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Two of Flipkart’s early investors, venture capital firm Accel Partners and New York-based investment firm Tiger Global, are in talks to sell their residual shares in the e-commerce company, which amount to approximately 5% of the total. They estimated that the American retail behemoth located in Bentonville will spend about ₹122 billion on this stake acquisition.
Tiger Global presently owns around 4% of Flipkart, compared to Accel’s slightly more than 1% ownership.
Walmart will expand its interest in Flipkart from its present holding of 72% if a deal is finalized.
Accel & Tiger sell and exit
“Tiger and Accel wish to fully sell and depart at this time. The negotiations are progressing, and when everything is ready, the deal will close “according to one of those who were previously mentioned.” Due to their (early) bets on the company and the subsequent cash exit, this is a major milestone for both Accel and Tiger Global.
Both investment firms are leaving Flipkart mostly due to the requirement to reimburse their sponsors or limited partners for funds that are nearing the end of their maturity cycle.
Following its ₹7500 Crores investment in payments company PhonePe through main and secondary investments, Walmart has decided to buy out Flipkart’s original backers Accel and Tiger Global.
The most recent deal is anticipated to provide returns for Accel, which made its initial investment in Flipkart in 2009, of about ₹28 billion once it exits the business. Accel had initially put in ₹81 million, and over time had invested a total of around ₹8 billion in the business launched in 2007 by Sachin and Binny Bansal.
When the venture fund sold a portion of its ownership in Flipkart at the time of Walmart’s ₹1 trillion acquisition in 2018, it generated massive returns of around ₹7500 crores.
According to Lee Fixel, a former partner in the NY company who oversaw its investments in Flipkart, Tiger Global’s final sale of its stock to Walmart will result in a sizable dividend and complete an investment cycle. Later, Fixel would increase Tiger Global’s stakes in India by investing in several businesses, including Razorpay, Delhivery, Freshworks, and Ola.
Tiger Global had made around ₹163 billion (at the current exchange rate) from the sale of a portion of its stock at the time Walmart acquired Flipkart in 2018. Of course, Tiger Global is also contesting a tax demand on its exit with Indian tax authorities.
In 2019, Fixel disbanded the fund to launch his own, called Addition. Tiger Global’s Scott Shleifer, head of private investments, and employees like Alex Cook now have responsibility for the Indian market.
In addition to Fixel, Kalyan Krishnamurthy, the CEO of the Flipkart group, was a previous executive of Tiger Global. Before eventually assuming his current position, he first joined the e-commerce company as its chief financial officer.
There is a liquidity crunch both globally and in India, which is why negotiations to offer Accel and Tiger Global an exit are still ongoing.
This demonstrates Walmart’s ongoing confidence in the Indian market demonstrated by its investments in Flipkart and PhonePe. The payments startup and its former parent company, Flipkart, recently parted ways.
Current and former Flipkart employees will each receive a one-time cash dividend of ₹51 billion as part of the PhonePe transaction. In an internal note, while announcing the Phone Pe split, Krishnamurthy confirmed the payout to the workers.
The staff compensation is for the value of PhonePe in their holding, not for investment in PhonePe’s new unit by the employee group, which holds stock options in the e-commerce company.
Along with secondary share sales, Walmart is contributing more than ₹7500 crores to PhonePe’s continuing investment round, bringing the total to roughly ₹163 billion.
As a part of the continuing investment round, PhonePe has raised ₹28 billion in the first tranche from General Atlantic at a pre-money valuation of ₹977 billion.
Flipkart’s valuation is also being revised as part of the separation, going from ₹3 trillion in 2021 to about ₹2 trillion today. For Flipkart, it has consistently held the nation’s market share leadership during both the primary holiday shopping season and business as usual.
The Singapore parent company of Flipkart had invested ₹7 billion in its India marketplace division. Flipkart had originally considered making an IPO in 2023, but the preparations have been put on hold for the time being due to changes in global macroeconomic uncertainty.
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