In the biggest deal in e-commerce space globally, retail giant Walmart picked up 77 per cent stake in Flipkart on Wednesday. Walmart is paying $16 million in a combination of secondary ($14 billion) and primary ($2 billion) transactions. The deal is yet to get regulatory approvals in India.

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However, Cape Town-based Naspers Ltd. netted a cool $1.6 billion profit from the sale of its 11 per cent stake in Flipkart, a deal almost as lucrative as its sale of Polish online auction site Allegro in 2016.

The biggest acquisition would also see Softbank exit its less than a year old investment in Flipkart of $2.5 billion for a 20 per cent stake in August 2017 through its Vision Fund.

Doug McMillon, president and CEO of Walmart Inc said, “Our investment is an opportunity to partner with the company that is leading the transformation of e-commerce in the market. Our investment will benefit India providing quality, affordable goods for the customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs.”

Walmart feels the investment will help accelerate Flipkart’s customer-focused mission to transform commerce in India through technology and underscores its commitment to sustained job creation and investment in India.

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K Vaitheeswaran, who started the first e-commerce venture in India, said the deal is good news and a very positive development for the Indian start-up ecosystem. “But it doesn’t make any sense from Walmart’s point of view. They are paying too much for too little I think. If you look at Amazon, it invested under $5 billion in five years to challenge Flipkart’s leadership position.

Flipkart’s existing shareholders, including co-founder Binny Bansal, Tencent Holdings Ltd, Tiger and Microsoft will hold the balance 33 per cent.

By Ashish K Tiwari, DNA India