Walmart-owned Flipkart Group on Monday said it has raised $3.6 billion in what is widely believed to be a pre-IPO exercise.

Flipkart’s post-money valuation has now galloped to $37.6 billion with this fresh funding, the largest for any Indian start-up to date. Flipkart was valued at $24.9 billion last year when it raised $1.2 billion in an internal round led by Walmart.

Financial investors

GIC, Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2 and Walmart, Tencent, Franklin Templeton, Tiger global, and several sovereign funds participated in the latest round.

SoftBank Vision Fund, which is understood to have invested around $500 million now, has made a comeback after it exited the start-up when Walmart bought a 77 per cent stake in Flipkart in May 2018 at a valuation of around $21 billion. With the infusion of new funds, the entire equity structure of Flipkart will change.

“This investment reflects the promise of digital commerce in India and the investors’ belief in Flipkart’s capabilities to maximise this potential for all stakeholders... we will focus on accelerating growth for millions of small and medium Indian businesses, including kiranas . We will leverage made-in-India technology to transform consumer experiences,” said Kalyan Krishnamurthy, CEO, Flipkart Group, in a statement.

This huge investment reaffirms Walmart’s desire to continue to invest in India, which represents a big e-commerce market opportunity, and their belief that the government will come out with a pragmatic e-commerce policy soon, said Arvind Singhal, CMD of Technopak.

Flipkart competes with Amazon which is also headquartered in Bengaluru; Reliance JioMart, and Tata Digital, which recently acquired a majority stake in BigBasket.

Flipkart's closest competitor, Amazon, has invested around $6.5 billion in the Indian market since its operations started in 2013. However, Flipkart started its operations nearly a decade earlier. “From our platform as one of the largest Asian e-commerce investors, SoftBank has a broad lens on the fundamental trends shaping digital commerce in the region. The opportunity to meet consumer demand for high-quality selection at low prices and a young population make online consumption critical to India’s quest for the ‘$5-trillion economy’ that Flipkart’s growth story has been enabling,” said Lydia Jett, Partner, SoftBank Investment Advisers.

ESOP buyback

As part of the latest fund-raising exercise, Flipkart also announced an ESOP buyback worth ₹600 crore, wherein employees will be able to liquidate up to 10 per cent of their vested stock options based on their holding pattern.