Sitting at the top of Indian e-commerce business, Flipkart is planning to invest more in start-ups and buyout smaller rivals as a leg up to its business. The biggest e-tailer of the country is planning to acquire online furniture retailer UrbanLadder, services firms UrbanClap and food delivery platform Swiggy, along with some start-ups in insurance and wealth management, a report by Livemint said quoting three sources familiar with the development.
The move is expected to widen the marginal lead Flipkart has against its closest competitor Amazon India. Changing its 'merger and acquisition' (M&A) stance, Flipkart is now planning to pour in more funds in prospects which will 'directly help its business', the report said, instead of mere financial investments, as it did back in 2014-15.
"Flipkart's new M&A approach is similar to what the large Chinese internet companies and ventures have done in China over much of the past decade - buy out smaller rivals and pick up strategic stakes in other large internet start-ups. Flipkart is trying to do two things - firstly, they are ensuring that they reach a size and scale from which they can't be toppled by even deep-pocketed rivals such as Amazon. Secondly, they are essentially not missing the bus and protecting themselves from disruption," Livemint quoted one of the sources.
Even Flipkart's filings with Ministry of Corporate Affairs depict the change in its M&A strategy. According to reports, the online shopping giant has set aside around Rs 8,000 crore for acquisitions and major investments this year, as opposed to Rs 3,000 crore it had last year.
The capital to fuel these plans come from the $3 billion (Rs 19,509 crores) Flipkart raised in a recent round of funding from SoftBank Group, Tencent Holdings, eBay Inc , Microsoft earlier this year. The company has declared that it has $4 billion (Rs 26,016 crore) in cash.
The talks are still in nascent stage, though, and none of the companies named in the report have confirmed any plans of merger. It is a long way before Flipkart enters into a deal with either of the expected companies. Flipkart, UrbanClap and Swiggy have not responded to request for comments, whereas UrbanLadder denied any plans for merger with Flipkart, as per the Livemint report.
According to recent reports, Flipkart is might go on to buy 8-19 per cent stake in Kishore Biyani's brick-and-mortar fashion retail chain, Future Lifestyle Fashions. Flipkart has also entered into talks with BookMyShow for buying minority stake in the ticketing website. The e-commerce leader in the nation is also going to invest $500 million in its payment arm PhonePe, which is fighting against the likes of Paytm and Amazon Pay for market share.