Walmart-Flipkart deal: Naspers earns four-fold returns in big India exit
Photo Credit: Manni Das/VCCircle

South Africa-based internet group Naspers said on Wednesday it has sold its entire 11.18% stake in Indian online retailer Flipkart to US-based Walmart Inc. for $2.2 billion (Rs 14,797 crore).

Naspers had initially invested in Flipkart in August 2012 and then put more money in subsequent funding rounds. Its total investment in Flipkart was close to $616 million, it said in a statement after Walmart announced it had bought a majority stake in India’s biggest e-commerce player.

The stake sale in Flipkart has helped Naspers clock an internal rate of return (IRR), or annualised return, of 32% in dollar terms. In comparison, better-than-average private equity firms strive to earn a dollar IRR of early to late teens in percentage terms. In local currency terms, PE firms typically chase an IRR of 20-30%.

The exit from Flipkart comes soon after Naspers raised $9.8 billion by selling a 2% stake in China’s Tencent Holdings. Tencent is also an investor in Flipkart; it had invested in the Indian company last year and hasn’t exited yet.

Naspers also said that it will use the proceeds to reinforce its balance sheet and invest over time to accelerate the growth of its classifieds, online food delivery and fin-tech businesses globally. It will also use the money to pursue “other exciting growth opportunities” when they arise, the company said.

In India, Naspers holds investments in online classifieds company OLX, payment and fin-tech services firm PayU; online food delivery startup Swiggy and online travel services firm MakeMyTrip.

Bob van Dijk, group chief executive of Naspers, said India is one of the most exciting markets in the world. “Our decision to sell is consistent with our strategy to realise value from the businesses we help to build,” he said.

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