Exit from Flipkart brings windfall for Tiger Global, Binny Bansal & Accel

Walmart paying $1.4 billion to buy Tiger Global’s stake in Flipkart was first reported by the Wall Street Journal, which cited a letter by the New York hedge fund to investors. 

Accel held more than 20 per cent in Flipkart initially when it backed the company in 2008, according to data analytics firm Tracxn. It later reduced its stake to about 6 per cent before Walmart acquired a majority share in Flipkart in 2018. 

In 2018, when Walmart invested $16 billion in Flipkart for the majority stake, the Bengaluru-based firm was valued less than $21 billion.

However, Accel retained a 1.1 per cent stake and has now fully exited the company. This generated cumulative returns of about $1.5 billion-$2 billion or 25-30X returns on its total investment, according to the sources. Similarly, Tiger Global has made cumulative gains of approximately $3.5 billion on its investments in the company, according to the WSJ. 

Though Flipkart co-founder Sachin Bansal had sold his entire stake to Walmart in 2018, Binny Bansal continued to hold a small stake (1-1.8 per cent) in the e-commerce firm. 

Binny Bansal has now also divested the remaining stake and has made a total of about $1-1.5 billion since inception to exit, according to the sources. He will remain on the company’s board. He is also an investor in PhonePe and sits on its board. 

“All of these investors have made tons of money,” said a person familiar with the matter.

Flipkart has achieved the new valuation of $35 billion without the support of PhonePe, which was part of the e-commerce company when it raised $3.6 billion in 2021 at a $38 billion valuation, according to the sources. This valuation showed a 50 per cent rise in a year — in July 2020, Walmart led a $1.2-billion round in Flipkart, valuing the e-commerce firm at $24.9 billion.

“Flipkart’s new valuation is without the support of PhonePe and this showcases its robust growth,” said a person familiar with the matter.

In December 2022, Flipkart and PhonePe announced the full ownership separation of the digital payments platform, setting the two businesses to chart their own paths and unlocking enterprise value for shareholders. Walmart-owned PhonePe recently achieved a pre-money valuation of $12 billion as part of an ongoing fundraising of up to $1 billion, following its domicile shift to India last year.

Confirming the developments to Business Standard, a Walmart spokesperson said the company has acquired additional shares of Flipkart from some investors, including Tiger Global, but didn’t share details of the transaction. 

 “We value Tiger Global’s involvement and support over the past several years. We remain confident in the future of Flipkart and are even more positive about the opportunity in India today than when we first invested,” said the Walmart spokesperson. “We continue to be impressed with Flipkart’s progress and remain focused on building a healthy, sustainable and profitable business for the long term, ensuring Flipkart continues to grow in an emerging and dynamic market.”

The exits of these investors come five years after Walmart in May 2018 announced it would pay $16 billion for an initial stake of approximately 77 per cent in the homegrown e-commerce company, at a valuation of less than $21 billion. Fintech firm PhonePe came to Walmart as part of the acquisition. After that, Walmart continued to participate in the funding rounds of Flipkart and PhonePe.

In an earlier interview with Business Standard, Doug McMillon, president and CEO of Walmart, said: “We want to be here for the long term and want Flipkart and PhonePe to be well supported by a breadth of investors. Even retail investors should participate in the upside of the business… Eventually, both will go for IPOs. I’m pleased that PhonePe is domiciled in India, which means its IPO will happen from here. But those decisions will be made by the independent boards and the timing will be made by them. We’ll see that both are timed at the right moment.”