Why Walmart Is Investing $16 Billion in This Indian E-Commerce Giant

Following months of speculation, Walmart Inc. has announced an agreement to buy a majority stake in India-based e-commerce giant Flipkart Group.

In a $16 billion deal, the U.S. retail behemoth secured an acquisition of 77 percent in the group’s business — the remainder of which will be held by current investors, including Flipkart co-founder and CEO Binny Bansal, Microsoft, Tiger Global and Tencent. (Walmart recently made the switch from Alibaba’s Alipay to Tencent’s WeChat Pay mobile payments service.)

The move marks the Arkansas-based retailer’s effort toward retail dominion outside of the country as it seeks to contend with rival Amazon, which had also reportedly been in talks to acquire Flipkart. It also thrusts Walmart into one of the world’s fastest-growing economies — with more than 1.3 billion people — establishing India as the latest battleground between Walmart and Amazon in the global e-commerce wars.

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“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of e-commerce in the market,” Walmart president and CEO Doug McMillon said in a statement. “Our investment will benefit India [by] providing quality, affordable goods for customers while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs.”

Upon closing this year, the deal would value Flipkart at more than $20 billion. Walmart India already operates 21 Best Price cash-and-carry stores and one fulfillment center in 19 cities across nine states in the country. In the statement, Walmart revealed intentions to retain Flipkart’s goal to become a publicly listed majority-owned subsidiary.

“This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers, and to create the next wave of retail in India,” Bansal added. “While e-commerce is still a relatively small part of retail in India, we see great potential to grow.”

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