BENGALURU| NEW DELHI Walmart Stores Inc is in the final stage of negotiations to become the largest shareholder in Flipkart — India’s biggest online retail company — pitching the world’s largest brick-and-mortar retailer into a direct face-off with another giant American retailer — Amazon — in one of the most dynamic markets for ecommerce globally. To begin with Walmart could buy about 20-26% stake and increase its shareholding to 51% in tranches.The Bentonville-based retail giant could invest up to $10-12 billion for the entire stake purchase, said two people directly aware of the ongoing discussions. The deal will include the purchase of shares from existing investors such as Japanese telecom and internet giant SoftBank, the sources said.“The primary investment will be between $1-2 bn, depending on the final size of the deal. The rest will be Walmart buying shares from other investors,” said one of the people cited above. The final shareholding pattern is yet to be finalised, the person said. The primary investment will value the Bengaluru-based company at about $20-22 billion, close to a 100% rise from the $10.2-billion valuation it got in April 2017, before it raised funds in a round led by Chinese internet giant Tencent.Flipkart’s valuation jumped to $14.2 billion after it had raised capital from SoftBank in August 2017. Walmart could take a handson role in running the company, if the current transaction fructifies, said a third person aware of the details of the ongoing talks. The American retail giant has concluded the due diligence process, the person said.Walmart is also negotiating with Flipkart’s early investors and some of its largest shareholders like South African media giant Naspers and New York-based Tiger Global for secondary share purchases that will mark one of the biggest exits for investors in the Indian startup ecosystem. Tiger Global, has poured in over $1billion into Flipkart, since first backing the company — founded by IIT Delhi graduates Sachin Bansal and Binny Bansal in 2009. While it sold shares worth over $500-600 million late last year, the remaining 20% stake that it still holds in the Indian online retailer is estimated to be worth close to $4 billion. Lee Fixel, who led the Tiger Global investment in the ecommerce company is believed to be playing a pivotal role in the ongoing negotiations with Walmart. “He has been parked between SoftBank headquarters in Tokyo and Walmart headquarters,” said one of the people cited above.SoftBank, which bought a 20% stake in Flipkart last August, is also mulling a partial exit after seeing the value of its stake nearly double within a few quarters, to $4-4.5 billion, said one of the people cited above.A representative for Flipkart declined to comment on the developments saying “as a policy, we do not comment on rumours or speculations”. Walmart and SoftBank declined to comment. Walmart has taken time to get its strategy right in India, a market where rival Amazon has made plain its aggressive intent, committing investments of over $5 bn to build logistics infrastructure and also woo customers with hefty discounts and select offerings including Prime Video.Walmart, which had aggressively lobbied the Indian government for an open market for foreign retailers in the past, adopted a more cautious stance after the breakdown of its joint venture with Bharti Enterprises five years ago. In contrast, Amazon founder Jeff Bezos has been vocal about his intention to fight for leadership in the Indian retail industry, including offline and online, which is expected to reach $1.3 trillion by 2020, according to Indian Brand Equity Foundation. Online retail is expected to be worth about 5-10% of this market, according to industry estimates.“For Walmart, Flipkart’s acquisition is the last opportunity to counter Amazon,” said an analyst who tracks the sector. For Flipkart, this round of fresh capital comes soon after it racked up a record $4 billion in funding in 2017. Besides US retail giant Amazon, Flipkart is also competing with Chinese e-commerce major Alibaba-backed Paytm Mall.Japan’s SoftBank is also in advanced talks to lead a $500-600 million round in Paytm Mall even as it mulls an exit from Flipkart. Investors tracking the space said the deals will help align the two companies as SoftBank is also the largest shareholder in China’s Alibaba Group ET was the first to report the exploratory talks between Walmart and Flipkart on September 27, 2016. It was also the first to report on Walmart being in advanced talks to pick up a stake in the ecommerce company in its January 31 edition. Walmart CEO Doug McMillon led a delegation that visited Flipkart’s Bengaluru office which included Marc Lore, CEO of Walmart e-commerce and Judith McKenna, CEO of Walmart International in January. Walmart’s investment negotiations with Flipkart also include a proposal to open a chain of retail stores in India, ET reported on February 20.The brick and mortar retailer’s share purchase from existing investors is expected to happen at a discount to the valuation of primary infusion, with negotiations going on at a number ranging from $15-18 billion, said two sources familiar with the matter. The deal would be a major payday for all the early investors. Flipkart’s first institutional backer Accel India had invested $1 million at a valuation less than $5 million in 2009. The VC firm has already cashed in about $150-200 million and will see the value of its 5-6% stake swell to about $1billion.An attractive share sale from Flipkart, which is the most heavily funded company in India with $7 billion of funding till date, could be a catalyst for the startup ecosystem where exits have been few and far between.