New Delhi/Bengaluru: American retailer Walmart Inc. may end up taking a large stake in Flipkart Ltd at a price that could value India’s largest e-commerce firm between $20 billion and $23 billion, said three people close to the development. If it goes through, the deal will pit Walmart against Amazon in India, mirroring the fight between the two companies in the US.

Walmart has expressed an interest in buying Flipkart but a buyout is unlikely to go through as a key Flipkart investor SoftBank Group Corp. is opposed to a sale, the three people added on condition of anonymity. “SoftBank is not willing to cash out this early as they see themselves as a long-term investor in Flipkart," said one of the three people mentioned above.

The talks are in the early stages and the companies haven’t finalized the final details, the people said. Walmart is expected to invest fresh capital in Flipkart as well as buy shares from existing investors including Accel Partners and Naspers, they added.

Any deal is likely to make Walmart the largest shareholder in Flipkart, they said.

The retailer is not the only suitor pursuing Flipkart. Google has also offered to invest in the e-commerce firm at a valuation of $15-$16 billion, said a fourth person close to the development, who also declined to be named. Flipkart is also talking to other investors, this person said, without naming the investors.

Flipkart’s biggest backer and key board member, Lee Fixel of Tiger Global, was at Walmart’s headquarters last week helping put together the deal, this person said.

Flipkart, Walmart and SoftBank declined to comment.

A spokesperson for Google did not respond to a request for comment.

The Economic Times reported on 31 January that Walmart was in talks to buy a 15-20% stake in Flipkart.

In August 2017, Flipkart received a commitment of $1.4 billion in fresh capital from Japan’s SoftBank Group, valuing the online retailer at about $14 billion.

Launched in 2007, Flipkart has thus far raised more than $6 billion.

The current valuation offered by Walmart includes Flipkart’s fashion businesses Myntra and Jabong, eBay India and mobile payments firm PhonePe.

Walmart has been eyeing India’s retail sector for years, but the existing foreign direct investment policy does not allow the US-based firm to serve have a meaningful presence in the country.

It does operate in India’s B2B (business to business) retail and e-retail segment, but has stayed away from direct retail. Walmart has avoided joining hands with any other Indian retailer since it’s partnership with Bharti Enterprises ended in 2013.

New potential investors are willing to value the company at a much higher price partly because Flipkart has shown that it is holding its own against Amazon, which has been unable to unseat its local rival as the country’s largest online retailer despite outspending Flipkart, say analysts.

Additionally, Flipkart is seen as the one of the most attractive assets in the global Internet economy, benefiting from the long-term potential ascribed to India’s internet market by investors.

Walmart and Google held funding talks with Flipkart in late 2016 but those discussions didn’t lead to deals.

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