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Google invests $350 million in Flipkart amid $1 billion funding round

Investment

In a major move in the e-commerce sector, tech giant Google has announced a $350 million investment in Walmart-owned Flipkart. The sizable funding is part of a broader $1 billion round that Flipkart is raising in 2023 as the company prepares for a future initial public offering (IPO).

While Flipkart did not disclose the exact figures of Google’s investment or the company’s current valuation, the latest round of funding led by Walmart marks a critical stage in Flipkart’s growth trajectory. The addition of Google as a minority investor is pending regulatory and customary approvals, according to a Flipkart statement.

The funding round is strategically timed as Flipkart seeks a valuation close to $60 billion by the time of its IPO, which is now slated for 2025-26. Sources suggest that the latest funding could value Flipkart at a 5-10% premium to its previous valuation of $33 billion, potentially taking it past $36 billion. This adjustment follows the spin-off of fintech firm PhonePe from Flipkart in December 2022.

«Google’s investment comes at a time when Flipkart is leading the e-commerce sector,» the insider said. «The capital will be used to expand infrastructure, strengthen the vendor support ecosystem and integrate cutting-edge technologies such as artificial intelligence (AI) and generative AI.»

The investment also includes a collaboration where Google will offer its cloud services to Flipkart, further modernizing the e-commerce giant’s digital infrastructure to better serve its nationwide customer base. The additional funding is expected to strengthen Flipkart’s competitive position against rivals such as Amazon, Reliance JioMart and Tata Digital and help it reach an additional 200 million customers, especially in tier II and III cities and rural areas.

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Earlier, Flipkart raised around $600 million from Walmart, strengthening its financial position. Since Walmart’s initial investment of $16 billion in 2018 for a 77% stake, the retail giant has actively participated in subsequent funding rounds for both Flipkart and PhonePe. Flipkart’s valuation saw a notable boost when Walmart led a $1.2 billion round in July 2020, valuing the firm at $24.9 billion.

The company is also reportedly considering moving its headquarters from Singapore back to India, a move that could have significant tax implications and was in line with its IPO strategy.

Analysts forecast India’s e-tailing sector to grow fivefold from $59 billion in 2022 to an estimated $300 billion by 2030, driven by value-conscious consumers and growing adoption of e-commerce in smaller cities. Flipkart’s record 1.4 billion customer visits during the 2023 Big Billion Days sales event underscores this trend.

“We are evaluating the optimal timing for our IPO amidst the strong growth of both Flipkart and PhonePe. The Indian market presents exciting opportunities,” a Walmart executive said during a recent analyst call.

The investment is in line with Google’s broader strategy to support India’s digital ecosystem, as highlighted by CEO Sundar Pichai by announcing a $10 billion digitization fund during a meeting with Prime Minister Narendra Modi last year.

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