Wal-Mart Stores is holding advanced talks to buy a minority stake in India-based online retailer Flipkart Online Services.
The US retailer may invest between $750m and $1bn. However, the final value of the deal depends on the negotiations and the valuation of the company, reported Cnbc.com.
Flipkart is a leading online retailer in India facing stiff competition from Amazon, which is gradually bolstering its investments in the country, reported Livemint.com.
"Flipkart’s recent valuation stands at $16bn."
According to research firm CB insights, Flipkart’s recent valuation stands at $16bn.
The deal may prove to be beneficial for both parties. Due to the 51% cap on foreign direct investment, Wal-Mart cannot open offline retail stores in the country, although it has around 20 wholesale stores. This deal be enable tapping of the growing ecommerce market. Meanwhile Flipkart will procure funding for expansions to ward off competition from Amazon.
Earlier this year, Amazon chief executive Jeff Bezos announced the online retailer's plan to invest $3bn.
Wal-Mart intially partnered with Bharti Airtel to expand in India but this joint venture failed to take-off. Eventually, Wal-Mart's stake was bought by Bharti Airtel.
According to estimates of Kotak Institutional Equities, the country's online retail segment will surge by 45% per annum over the next four years to reach $28bn.
