Flipkart to Raise $1 Billion Before IPO - Latest News

Flipkart Pursues $1 Billion Funding Round Prior to Potential IPO

Flipkart, a leading e-commerce company in India, is reportedly seeking to secure approximately $1 billion in funding. This pre-IPO financing round aims to value the company at up to $30 billion, according to sources familiar with the discussions.

Fundraising and IPO Timeline

The Bangalore-based company, which currently has Walmart as a majority stakeholder following a $16 billion acquisition in 2018, began exploring fundraising options earlier in the year. These efforts have since intensified, leading to the engagement of investment bankers to facilitate the process.

Internal discussions have also centered around a potential acceleration of the company’s initial public offering (IPO) timeline, possibly moving it to early next year. However, the firm still intends to file for an IPO later this year, with a listing expected to follow several months afterward.

Investor Sentiment and Market Conditions

Several prominent investors in Flipkart have refrained from commenting on the ongoing fundraising talks. The e-commerce firm itself has not yet responded to requests for comment. However, an early investor, having previously divested their stake, indicated that raising capital is a logical step given the current favorable market conditions.

Notably, India has witnessed a surge in unicorn startups this year, with 11 achieving this status, many within the last month. This growth is fueled by significant investment from firms like Tiger Global and Falcon Edge in the world’s second-largest internet market.

Valuation and Financial Performance

Flipkart was last valued at around $24.9 billion in the previous year, following a $1.2 billion funding round led by Walmart. While the new investment amount and final valuation are still subject to negotiation, one source suggests they may be adjusted.

Walmart’s earnings calls have highlighted Flipkart’s strong performance. In November, the company reported record-high monthly active customers for both Flipkart and its payments platform, PhonePe. Despite a 53-day national lockdown in India impacting growth in the first half of last year, Flipkart experienced a robust recovery and concluded Q4 with substantial momentum.

Navigating Challenges and Expanding Infrastructure

The company’s growth was temporarily affected by a second wave of the coronavirus in April, prompting restrictions on non-essential item deliveries. In response, Flipkart announced plans to bolster its grocery infrastructure as it expands its presence in this category.

Competitive Landscape

Flipkart faces intense competition from Amazon in the Indian market. Amazon has already invested over $6.5 billion in the South Asian region. Both companies are striving to broaden their reach in India, where traditional brick-and-mortar stores still dominate retail sales.

The competitive landscape has further evolved with the emergence of JioMart, a joint venture between Reliance Retail and Jio Platforms. JioMart launched last year in over 200 Indian cities and towns.

Growth Potential of the Indian E-commerce Market

The Indian e-commerce market represents a significant growth opportunity. Projections by Bain & Company estimate that the market will reach over 300 million shoppers by 2025, generating more than $100 billion in online sales.

Strategic Initiatives

Both Flipkart and Amazon have implemented various strategies to expand their reach in India. These include offering support for Hindi and other Indian languages, and establishing partnerships with local retail stores.

Kalyan Krishnamurthy, CEO of Flipkart, emphasized the favorable demographic trends in India, stating that millennials currently comprise 34% of the population and are projected to represent 75% by 2030. He also highlighted the increasing number of digital users, currently at 700 million, and the role of the Indian government’s Digital India initiative.

This combination of a large, increasingly digital, and youthful population presents a unique opportunity for e-commerce growth in India.