Global internet and entertainment group Naspers has today announced the sale of its stake in Indian e-commerce company Flipkart to American based Walmart Group. The transaction represents an 11.8% stake in Flipkart valued at USD 2.2 Bn.
According to the CEO of B2C e-commerce at Naspers, Oliver Rippel, Naspers has been an integral part of steering the e-commerce platform’s growth over the last six years, and this exit marks a triumphant return on investment. “We initially invested in Flipkart in August 2012, and we’re proud to have been part of the journey to build the leading e-commerce player in India. We wish the team well as they continue their journey,” Rippel said in a statement.
Bob van Dijk, Group CEO at Naspers, was also reminiscent of the company’s involvement in Flipkart and is proud to be exiting what he believes is a sustainable business. He is quoted saying, “India is one of the most exciting markets in the world. We are proud to back Indian entrepreneurs whom we believe have what it takes to build outstanding and long-lasting businesses, and Flipkart is a great example of this. Our decision to sell is consistent with our strategy to realise value from the businesses we help to build. The time has come for us to wish the team well for the next chapter of their story, and we are excited about the future of OLX, PayU, Swiggy and MakeMyTrip.”
Flipkart executives are also excited by their past and success achieved over the last decade, but it’s their next chapter that is a tantalizing prospect for the Walmart partnership. “Flipkart has established itself as a prominent player with a strong, entrepreneurial leadership team that is a good cultural fit with Walmart,” said Judith McKenna, president and chief executive officer of Walmart International. “This investment aligns with our strategy and our goal is to contribute to India’s success story, as we grow our business. Over the last 10 years, Flipkart has become a market leader by focusing on customer service, technology, supply chain and a broad assortment of products. With Flipkart and the other shareholders who have come together, we will continue to advance the winning eCommerce ecosystem in India.”
Naspers is regarded as one of the world’s leading investors in technology and has operations in over 120 countries. Whilst some of these investments are on the continent a good proportion of them are global investments. Their focus has been on accessing and growing their footprint in e-commerce marketplaces and the sale of their Flipkart stake, in conjunction with their recent stock sale in Tencent, has now furnished their war chest with a combined rand value of R143.7bn.
The company has ambitions of reinvesting their earnings to grow some of their portfolio investments. “The proceeds will be used to reinforce Naspers’ balance sheet and will be invested over time to accelerate the growth of Naspers’ classifieds, online food delivery and fintech businesses globally, and to pursue other exciting growth opportunities when they arise,” the company said in a statement.
Launched in October 2007, Naspers joined the fray in August of 2012, and their 11.8% share investment grew to represent an Initial Rate of Return (IRR) of approximately 32%. This news boosted their performance on the Johannesburg Stock Exchange (JSE) with Naspers shares surging to R3 125.10 per share shortly after the announcement, before surging to R3 129.99 by 16:00 on the JSE.
Walmart is geared towards an expansion project in India and is enticed by its growth potential locally and globally according to Walmart’s President & CEO Doug McMilon. “India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with a company that is leading the transformation of eCommerce in the market,” said Doug McMillon.
Image courtesy: The Indian Express