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Feb, 20 2018

Walmart-Flipkart deal may include retail chain set up in India

Walmart is in talks to take 40% stake of Flipkart, but as per the reports there seems the possibility of only 20% stake. This is because of objections from investor SoftBank that has a 20.8 per cent stake in the Indian e-tailer.

Walmart's investment deal with the home grown giant Flipkart has not only added supply to the local firm but as per the reports the deal may include setting up of a retail - offline - chain in India as well. The deal will pave a way for American retail giant to open retail outlets in the country which it currently cannot do directly because of certain FDI restrictions on overseas investment.

Walmart is in talks to take 40% stake of Flipkart, but as per the reports there seems the possibility of only 20% stake. This is because of objections from investor SoftBank that has a 20.8 per cent stake in the Indian e-tailer.

A source said, as mentioned in agency reports, "As large as they (Walmart) are, Amazon has eaten away a significant chunk of their revenues and I think...they view India as the largest market possibly for this (taking on Amazon). Last month Walmart also said it was partnering with Japan's Rakuten Inc (4755.T) in online grocery deliveries.”

An investment banker told the newsman that Flipkart has been waiting for the right investment partner to set it offline retail stores in India. The partnership between Walmart and Flipkart has already consolidated in a good relation.

The reports that came after the announcement of this deal predict that Flipkart would be valued at a whopping USD 20-23 billion after the deal.

Flipkart, along with its fashion portals Jabong and Myntra control nearly 40 per cent of the Indian online space, which also places it ahead of Amazon. It is also looking to expand into grocery delivery with its Supermart. While Flipkart is sharpening its knives, Amazon is doing its bid to spread out to the Indian offline sphere too.

Amazon has recently launched its first food retailing in Pune, becoming the first foreign e-tailer to sell food items directly to customers. This roll out comes after Amazon was granted permission by the Indian government last year to invest USD 500 million in a wholly-owned venture to sell local produces and packaged food items through online and offline mediums.

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