CPP Investments' Big Investment in India's Flipkart Group
The pension fund manager says Flipkart has raised US$3.6 billion in the current funding round, led by CPP Investments, Walmart, GIC and Softbank.
The Flipkart Group includes Flipkart, Myntra, Flipkart Wholesale and Cleartrip.
The company was started in 2007 and has more than 350 million registered customers.
CPP Investments says it believes India will be a leading source of global growth in the decades ahead, supported by positive demographics, a growing middle class and deepening internet penetration.
CPP Investments is the independent investment manager for the Canada Pension Plan.
The BBC also reports Flipkart, India's online retail giant raises $3.6bn in latest funding round:
Indian e-commerce giant Flipkart has raised another $3.6bn (£2.6bn) ahead of an expected stock market debut.
The Walmart-backed company said it will use the money to expand its operations and invest further in its grocery, fashion and delivery service.
The latest round of fund-raising increased the firm's value to $37.6bn.
The new valuation is more than double the amount the American retail chain paid for a majority stake in Flipkart three years ago.
Flipkart's chief executive Kalyan Krishnamurthy said the new funds would support the company's expansion plans: "As we serve our consumers, we will focus on accelerating growth for millions of small and medium Indian businesses."
"We will continue to invest in new categories and leverage made-in-India technology to transform consumer experiences and develop a world-class supply chain," Mr Krishnamurthy added in a company statement.
The new round of funding was led by Singapore's sovereign wealth fund GIC, the Canada Pension Plan Investment Board, Japan's SoftBank and Walmart.
The deal marks the return of SoftBank, which sold its stake of around 20% of Flipkart to Walmart as part of the 2018 deal.
Other investors included sovereign wealth funds from Malaysia, Qatar and Abu Dhabi.
The fund-raising came as the Bengaluru-based company is expected to make its stock market debut as early this year.
In 2018, Walmart paid $16bn for a 77% stake in Flipkart and said later said that it could take the company public within four years.
In September, the Reuters news agency reported that Flipkart was preparing for an initial public offering outside of India as early as this year, in a move which could value it at as much as $50bn.
Since the Walmart deal the company has added many more items to its online store, including groceries and furniture.
Flipkart has also increased its warehouse capacity as it battles competition from Amazon's Indian operation and local rival Reliance Industries, which is owned by Asia's richest person Mukesh Ambani.
India has seen huge growth in online start-ups, selling everything from groceries to holidays, which has been driven by the rapid adoption of smartphones and cheap mobile data deals.
Several of the country's biggest digital start-ups are already on track to sell shares on the stock market.
India's biggest food delivery app Zomato is due to make its debut this month, while payments service PayTM is expected to launch its initial public offering by the end of the year.
Lilian Diep of AndNowUKnow also reports Walmart-backed Flipkart raises $3.6 Billion in funding to accelerate growth; Kalyan Krishnamurthy and Judith McKenna Share:
As Walmart built out its retail network in India, one of its primary partners was The Flipkart Group, the e-commerce and private technology company. Backed by multiple global investors, Flipkart is further enacting a crucial strategy to bolster businesses and help it harness technology to spur growth. The group recently announced it has raised $3.6 billion USD in funding to advance the digital commerce ecosystem in India, bringing its total valuation to $37.6 billion USD.
“At Flipkart, we are committed to transforming the consumer internet ecosystem in India and providing consumers access and value,” said Kalyan Krishnamurthy, Chief Executive Officer of Flipkart Group. “This investment by leading global investors reflects the promise of digital commerce in India and their belief in Flipkart’s capabilities to maximize this potential for all stakeholders. As we serve our consumers, we will focus on accelerating growth for millions of small and medium Indian businesses, including kiranas. We will continue to invest in new categories and leverage made-in-India technology to transform consumer experiences and develop a world-class supply chain.”
The round of funding was led by financial investors GIC, Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2, and Walmart. Additional investments came from sovereign funds DisruptAD; Qatar Investment Authority; Khazanah Nasional Berhad; and marquee investors Tencent, Willoughby Capital, Antara Capital, Franklin Templeton, and Tiger Global.
“Flipkart is a great business whose growth and potential mirrors that of India as a whole—that’s why we invested in 2018 and why we continue to invest today,” said Judith McKenna, President and CEO, Walmart International. “Kalyan and the team have put the Indian customer at the center of everything and they have continued to innovate in the categories and services Indian customers want most, creating new jobs and growth opportunities for Indian entrepreneurs and small businesses alongside them. The quality of the investor group and valuation announced today is further confirmation of global confidence in Flipkart and its mission to transform commerce in India.”
Flipkart will use these investments to further bolster its technology, supply chain, and infrastructure to address the requirements of a rapidly growing consumer base in India, according to a press release. One of Flipkart’s key focuses is to help informal commerce segments leverage the power of technology. By expanding grocery and last-mile delivery programs, the group will also help companies digitize and accelerate growth.
In December of last year, Walmart also announced that it hopes to announce Flipkart's public listing in the U.S. Will this new investment bring it closer?
CPP Investments put out a press release on the deal:
Canada Pension Plan Investment Board (CPP Investments) announced today that it has invested US$800 million in the Flipkart Group (Flipkart), one of India’s leading digital commerce companies. Flipkart has raised US$3.6 billion in the current funding round, led by CPP Investments, Walmart, GIC and Softbank.
“One of the key investment themes for CPP Investments has been Asia’s domestic consumption. We believe India will be a leading source of global growth in the decades ahead, supported by positive demographics, a growing middle class and deepening Internet penetration,” said Agus Tandiono, Managing Director, Head of Fundamental Equities Asia, CPP Investments. “This investment in Flipkart builds on our program to provide long-term capital to industry leaders. We look forward to supporting Flipkart’s efforts in growing India’s e-commerce market.”
The Flipkart Group is one of India’s leading digital commerce entities and includes group companies Flipkart, Myntra, Flipkart Wholesale and Cleartrip. Started in 2007, Flipkart has enabled millions of consumers, sellers, merchants, and small businesses to be a part of India’s e-commerce revolution, with a registered customer base of more than 350 million, offering over 150 million products across 80+ categories.
“At Flipkart, we are committed to transforming the consumer internet ecosystem in India and providing consumers access and value. This investment by leading global investors such as CPP Investments reflects the promise of digital commerce in India, and their belief in Flipkart’s capabilities to maximise this potential for all stakeholders,” said Kalyan Krishnamurthy, Chief Executive Officer, Flipkart Group. “As we serve our consumers, we will focus on accelerating growth for millions of small and medium Indian businesses. We will continue to invest in new categories and leverage made-in-India technology to transform consumer experiences and develop a world-class supply chain.”
About CPP Investments
Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Fund in the best interest of the more than 20 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At March 31, 2021, the Fund totalled C$497.2 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Facebook or Twitter.
The Flipkart Group is India's biggest online store for Mobiles, Fashion (Clothes/Shoes), Electronics, Home Appliances, Books, Jewelry, Home, Furniture, Sporting goods, Beauty, Travel, Grocery and more.
This isn't the first major equity round of financing by major investors.
It was exactly one year ago that Flipkart Group raised another equity round with a Walmart-led investor group, valuing company at US$24.9 billion post-money:
BENTONVILLE, Ark., BENGALURU, India - July 14, 2020: Flipkart Group today closed an additional $1.2 billion equity round to support continued development of its eCommerce marketplace as India emerges from the Covid-19 crisis. The investment is led by Walmart, Flipkart Group's majority owner, along with a group of existing shareholders and values the company at $24.9 billion post-money. It will be funded in two tranches over the remainder of the fiscal year.
"We're grateful for the strong backing of our shareholders as we continue to build our platform and serve the growing needs of Indian consumers during these challenging times," Flipkart CEO Kalyan Krishnamurthy said. "Since Walmart's initial investment in Flipkart, we have greatly expanded our offer through technology, partnerships and new services. Today, we lead in electronics and fashion, and are rapidly accelerating share in other general merchandise categories and grocery, all while providing increasingly seamless payment and delivery options for our customers. We will continue innovating to bring the next 200 million Indian shoppers online."
Founded in 2007, the Flipkart Group includes Flipkart, digital payments platform PhonePe, fashion specialty site Myntra and eKart, a logistics and delivery service focused on solving the last mile in India's Tier II and Tier III cities. In 2018, Walmart Inc. invested $16 billion for a majority stake in the group.
Flipkart recently surpassed 1.5 billion visits per month and reported 45-percent growth in monthly active customers and 30-percent growth in transactions per customer for FY20. The company is democratizing commerce by providing sellers and MSMEs access to a national market and by investing in technology such as voice assistants and local language interfaces to help make shopping easier for non-English speaking customers. Today, Flipkart offers 150 million products across more than 80 categories, and has pioneered customer-centric services such as Cash-on-Delivery, No-Cost EMI and easy returns. PhonePe recently reported annualized total payments value (TPV) of $180 billion on more than 500 million monthly transactions.
"Flipkart continues to leverage its culture of innovation to accelerate growth and enable millions of customers, sellers, merchants and small businesses to prosper and be a part of India's digital transformation," said Judith McKenna, President and CEO of Walmart International. "Kalyan and team have a clear vision and are relentlessly focused on giving Indians frictionless choice in how they shop and sell online. We're excited to see what the future holds as they continue their journey to become India's most trusted eCommerce marketplace."
About the Flipkart Group:
The Flipkart Group is one of India's leading digital commerce entities and includes group companies Flipkart, Myntra, and PhonePe. Started in 2007, Flipkart has enabled millions of consumers, sellers, merchants and small businesses to be a part of India's e-commerce revolution. With a registered customer base of over 200 million, offering over 150 million products across 80+ categories. Our efforts to democratize e-commerce in India, drive access and affordability, delight customers, create lakhs of jobs in the ecosystem and empower generations of entrepreneurs and MSMEs has driven us to innovate on many industry firsts. Flipkart is known for pioneering services such as Cash on Delivery, No Cost EMI and easy returns – customer-centric innovations that have made online shopping more accessible and affordable for millions of Indians. Together with Myntra, which holds a prominent position in the online fashion market, and PhonePe, India's fastest growing digital payments platform, the Flipkart Group is steering the transformation of commerce in India through technology.For more information, please contact media@flipkart.com.
The latest equity raise of US$3.6 billion in funding to advance the digital commerce ecosystem in India brings Flipkart Group's total valuation to US $37.6 billion.
Going from a total valuation of US$25 billion to close to US$40 billion in one year is exceptional but we should also keep in mind that India did suffer a nasty second wave of COVID-19 which peaked in May, and that accelerated online e-commerce trends which are taking hold in that country.
Daily new coronavirus cases in India have fallen to just over 40,000 in recent weeks, down from the peaks of 400,000 in May, but top Indian doctors say a third wave is inevitable.
This will just reinforce the shift to e-commerce which is more a function of India's favorable demographics and burgeoning middle class.
All this to explain why CPP Investments was wise to join other well-known investors in this latest round of equity financing to grow the Flipkart Group's operations (the company said it will use the money to expand its operations and invest further in its grocery, fashion and delivery service).
And US $800 million out of a total US $3.6 billion equity raise is no small amount, it represents 22.2% of the total amount and you had some big investors in this latest round:
The round of funding was led by financial investors GIC, Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2, and Walmart. Additional investments came from sovereign funds DisruptAD; Qatar Investment Authority; Khazanah Nasional Berhad; and marquee investors Tencent, Willoughby Capital, Antara Capital, Franklin Templeton, and Tiger Global.
Of course, US$800 million is a little over $1 billion Canadian and that represents roughly 0.2% of CPP Investments' total Fund assets, which is still sizable but not as significant at other investments.
Still, I think the biggest attraction to this deal is Walmart, FlipKart Group's majority owner (owns 77% of the company), and its international operations which are overseen by Judith McKenna, President and CEO, Walmart International. She rightly who praised Kalyan Krishnamurthy, Chief Executive Officer of Flipkart Group:
She's spot on, the quality of the investor group and valuation announced is further confirmation of global confidence in Flipkart and its mission to transform commerce in India.“Flipkart is a great business whose growth and potential mirrors that of India as a whole—that’s why we invested in 2018 and why we continue to invest today,” said Judith McKenna, President and CEO, Walmart International. “Kalyan and the team have put the Indian customer at the center of everything and they have continued to innovate in the categories and services Indian customers want most, creating new jobs and growth opportunities for Indian entrepreneurs and small businesses alongside them. The quality of the investor group and valuation announced today is further confirmation of global confidence in Flipkart and its mission to transform commerce in India.”
And now, CPP Investments owns a nice investment in this company before it goes public in the US, that's relationship investing at its best.
Below, Julie Hyman breaks down Monday’s business headlines, including: Walmart’s Flipkart Group getting a valuation of $37.6 billion ahead of its public listing in the US.
And in October 2020, Flipkart Group was estimated to have posted a little over double the sales of closest rival Amazon in the first week of the ongoing festive period, claimed a report by market tracker RedSeer Consulting.
If it can keep that up, this will be a great investment for Walmart and the elite group of investors, including CPP Investments, that took part in the latest funding round.
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