Walmart International President Judith McKenna said the company is open to Flipkart's IPO
Walmart has stated that it is "open to an IPO" for its Indian e-commerce subsidiary Flipkart, but that there is "no specific timeline" for the share sale. Walmart International President and CEO Judith McKenna said on June 7 at the DB Access Global Consumer Conference that both Flipkart and payment app PhonePe are doing well.
"I am really pleased with what they have done since we acquired them. We have said that clearly a number of times," she added.
During the pandemic, e-commerce grew rapidly in India, as containment measures introduced millions to the convenience of online shopping and prompted seasoned online shoppers to buy more.
Social distancing compulsions, a massive smartphone base, and reliable broadband have accelerated e-commerce adoption beyond metros and into smaller cities and towns. To meet the increased order volume, e-commerce companies are increasing capacity and hiring.
"From the day we made the acquisition or the investment, we made it clear we would be open to an IPO,” McKenna said in a DB Global Consumer Conference. “We will do it (Flipkart IPO) when it's time for the business, it's not an output, it’s not a target for us to do that."
"But if we build a strong business, and we continue to do the things that we need to do to ensure that long-term and sustainable growth, that is a possible route that we would consider in the future, but certainly no specific timeline on that (IPO)," she said.
Walmart Inc. owns the majority of Flipkart. In 2018, it invested USD 16 billion in the Bengaluru-based e-commerce platform, acquiring a 77% stake. It led a USD 1.2 billion round in Flipkart last July, valuing the e-commerce firm at USD 24.9 billion.
According to sources, SoftBank Group is in talks with Flipkart about investing $500-600 million in the Walmart-owned e-tailer.
The transaction, which could include Singapore's sovereign wealth fund GIC and Canadian pension fund CPPIB, could value Flipkart at USD 30-32 billion, according to the sources. Flipkart is also said to be planning an initial public offering (IPO) for next year.
McKenna also noted that, following COVID, there is an increase in overall digital penetration in India.
In terms of PhonePe, McKenna stated that the payment platform has recently surpassed 300 million users in a five-year period.
"So they (PhonePe) are going into new financial services areas, be that gold, insurance, mutual funds, and different areas, which are all strengthening to the P&L. So confident and happy with the progress the businesses are making," she said.