Binny Bansal, Flipkart's co-founder and group chief executive officer, said the deal "is of enormous importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India". "While e-commerce is still a relatively small part of retail in India, we see great potential to grow".
As industry applauded, sections of traders and the RSS affiliate, Swadeshi Jagran Manch, alleged that Walmart was "circumventing" rules for a "back-door entry".
Walmart's investment includes $2bn in new equity funding, which the companies say will be used to spur Flipkart's growth. He said Walmart is the ideal partner for the next phase of Flipkart journey.
Financials filed with the Registrar of Companies, however reveal that while the losses rose in the period between December, 2009 (Rs 151 crore) to December, 2013 (Rs 532 crore), the company managed to reduce its losses in the following two years.
Key Flipkart investors, including co-founder Binny Bansal, Tiger Global and Tencent, will continue to hold minor stakes in the company, Walmart said.
"This is clearly an investment for the future, and... is indicative of Walmart's long standing strategy of shifting resources into higher growth potential markets", said Charlie O'Shea, lead retail analyst at Moody's. Increasingly, its population of 1.25 billion is buying goods through mobile devices, and Walmart hopes to capitalise on that trend.
Flipkart, founded in 2007, was the leader in India's small but fast-growing e-commerce market for a half-dozen years. The companies said they're also in talks with other potential investors, which could result in the United States company's stake being lowered, though it will retain majority ownership. It was valued at about $12 billion past year, according to researcher CB Insights.
Sources have previously told Reuters that SoftBank would sell all its shares in Flipkart to Walmart.
"Walmart is purchasing Flipkart", Softbank CEO Masayoshi Son said during the presentation (speaking in Japanese with translation provided by a SoftBank representative).
However, the deal is being terminated after Walmart bought a controlling stake in the Indian ecommerce major. The transaction is expected to close later this year and will be subject to regulatory approvals. "This will provide them around 54 million active online buyers and a company with 40 percent of the Indian online retail market".
Other investors like Naspers and eBay said they sold their holdings in Flipkart. Two billionaires created Before the deal, Flipkart co-founders Binny and Sachin Bansal each owned about 5 per cent, according to a Bloomberg analysis of the company's annual return filed in Singapore.