The deed is finally done.

After months of breathless whispers, carefully-leaked PR plants and incessant speculation, Walmart has formally announced that it is buying a majority stake in Flipkart in a $20 billion deal, ponying up $16 billion to acquire 77% of the company through a mixture of primary and secondary investments.

The first question that people seem to be asking is whether this is a good outcome for Flipkart.

Without a doubt.

It is not just a good but a glorious outcome for Flipkart.

Barely two years back, Flipkart was witnessing wholescale executive leadership changes, steep valuation markdowns by investors and experts penning obituaries saying that the company “had no clue which way to go”, that “a down round is inevitable and an IPO is impossible”, and that it was just a matter of time before Amazon bested Flipkart permanently.

Fast forward to today. Not only has Flipkart successfully managed to hold pole position in India, its leadership has guided the company to the biggest payoff ever for an e-commerce globally. $16 billion in cash.

Given the ease with which billion-dollar figures have been bandied about in the press over the past few years, it might be difficult for most of us to appreciate how big a number $16 billion really is. In rupee terms, it is more than one lakh crore – not 1,000 crore or 10,000 crore but 100,000 crore! It is, by far, the biggest outcome for an Indian startup and the largest e-commerce exit ever globally. Equally importantly, every single stakeholder of Flipkart, from investors to founders to employees, made life-changing money from the deal. Even the investors who poured in billions of dollars just last year made a smart exit.

While Walmart is undoubtedly a behemoth, a $20 billion bet is very large, even for a company of Walmart’s scale

But isn’t Flipkart’s story still work-in-progress? Wouldn’t an IPO have been a more meaningful exit?

Not really. Even in the best case scenario, a purported IPO would have been three-four years down the line. And given the nature of the beast, it is quite likely that Flipkart would then have struggled to get this valuation. Besides, it’s unlikely that all its stakeholders would have exited so handsomely. IPOs rarely allow more than 20-30% of investors to exit completely unlike this private sale to Walmart where more than 2/3rd of the existing shares were sold. Also, given that Walmart is a public company—by virtue of being a majority-owned company of a public company—Flipkart is effectively a public company itself. Walmart has already informed its shareholders that Flipkart’s financials will be reported as part of its international business segment.

While this is great for Flipkart, the burning unanswered questions, of course, are about Walmart.

AUTHOR

Sumanth Raghavendra

Sumanth is a serial entrepreneur with more than eighteen years experience in running startups. He is currently the founder of Deck App Technologies, a Bangalore-based startup attempting to re-imagine productivity software for the Post-PC era. Sumanth’s columns appear regularly in leading publications. He holds MBA degrees from the Indian Institute of Management, Bangalore and Thunderbird, The American Graduate School of International Management, USA.

View Full Profile

Subscribe to read this story

The Ken is the only business subscription you need. Questions?

 

Premium

  • 5 original and reported longform business stories every week
  • Access to ONLY India edition
  • Close to 250 exclusive stories every year
  • Full access to over 5 years of paywalled stories
  • Pick up to 5 premium subscriber newsletters
  • 4 original and reported longform business stories each week
  • Access to ONLY Southeast Asia edition
  • Close to 200 exclusive stories every year
  • Full access to all paywalled stories since March 2020
  • Pick up to 5 premium subscriber newsletters

Rs. 2,750 /year

$ 120 /year

India Edition
Subscribe Subscribe
Most Asked For

Borderless

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories

Rs. 4,200 /year

Subscribe
 

Echelon

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories
  • Bonus annual gift subscription
  • Priority access to all new products and features

Rs. 8,474 /year

Subscribe
Or

Questions?

What kind of subscription plans do you offer?

We have three types of subscriptions
- Premium which gives you access to either the India or the Southeast Asia edition.
- Borderless which gives you complete access to The Ken across both editions
- Echelon which gives you complete access to The Ken across both editions along with a bonus gift subscription

What do I get if I subscribe?

The Premium edition gives you access to stories in that edition along with any five subscriber-only newsletters of your choice.

The Borderless and Echelon subscription gives you complete access to The Ken across editions and unlimited access to as many newsletters as you like.

What topics do you usually write about?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics. We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

Our specialised subscriber-only newsletters are written by our expert, award-winning journalists and cover a range of topics across finance, retail, clean energy, cryptocurrency, ed-tech and many more.

How many newsletters do you have?

We are constantly adding specialised subscriber-only newsletters all the time. All of these are written by our team of award-winning journalists on a specialised topic.

You can see the list of newsletters that we publish over here.

Does a Premium subscription to your Indian edition get me access to the Southeast Asia edition? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

We recommend the Borderless or the Echelon Plan which will give you access to stories across both editions.

Do you have a mobile app?

Yes! We have a top-rated mobile app on both iOS and Android which allows you to read on-the-go and has some amazing features like the ability to bookmark stories, save on your device, dark mode, and much more. It’s really the best way to read The Ken.

Is there a free trial?

You can sign up for a free account to experience The Ken and understand our products better. We’ll send you some free stories and newsletters occasionally, and you can access our archive of previously published free stories. You can stay on the free account as long as you’d like.

The vast majority of our stories, articles and newsletters can be accessed only by a paid subscription.

Do you offer any discounts?

Sorry, no. Our journalism is funded completely by our subscribers. We believe that quality journalism comes at a price, and readers trust and pay us so that we can remain independent.

Do you offer refunds?

No. We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Just write to us at [email protected] with details. We’ll help you out.

I have a few more questions. How can I reach out to you?

Sure. Just email us at [email protected] or follow us on Twitter.