Walmart Inc's Flipkart will buy a 7.8 per cent stake in Aditya Birla Fashion and Retail Ltd for Rs 1,500 crore ($204 million), the fashion retail company said, sending its shares up 6 per cent on Friday.
The investment comes at a time when Amazon.com Inc, billionaire Mukesh Ambani-led Reliance Industries and Flipkart are in a race to gain market share in India's fast-growing online market for food and groceries.
"Fashion retail in India is set for robust long-term growth due to strong fundamentals of a large and growing middle class... Rapid growth of technology infrastructure will further accelerate this process," Aditya Birla Group Chairman Kumar Mangalam Birla said.
With the COVID-19 pandemic keeping most people indoors, Indians are turning to online platforms for all purchases from bread to phones to clothes.
Media reports had said both Amazon and Flipkart were in the race to pick a stake in Aditya Birla Fashion and Retail, which owns and operates the Pantaloons retail chain and owns rights to sell Forever 21 merchandise in India.
Aditya Birla said it would use the money to strengthen its balance sheet as it scales up its businesses.
Shares of Aditya Birla Fashion and Retail surged as much as 6.5 per cent to Rs 163.45, their highest since March 30.