Walmart store in Brazil. (Photo: Walmart Brazil)

Walmart sells 80pct of its participation in Brazil business to investor fund

Retail giant Walmart Inc. announced it has sold an 80 per cent stake in its Brazilian operations to US global capital privaty equity firm Advent International for an undisclosed amount.

Walmart will maintain the remaining 20 per cent ​​of the business in Brazil, where it has 438 stores in 18 states and 55,000 associates after 22 years of operations.

The operation is subject to regulatory approval by Brazil.

As a result of the transaction, Walmart expects to record a non-cash charge of approximately USD 4,500 million related to the agreement in the second quarter.

For a decade, Brazil was a focus of expansion for the company, but its unit in this country stumbled in recent years as operating problems worsened the effects of a deep recession, reported Reuters.

Patrice Etlin, managing partner of Advent International in Brazil, said that this investment fund has been in Brazil for more than 20 years, and highlighted the importance of this partnership with one of the country's leading retailers.

"We believe that with our local market knowledge and retail expertise we can position the company to generate significant results and reach new levels of success in Brazil,” she stressed.

“We plan to invest in the business, work with the Walmart Brazil management team, associates, Walmart and our industry advisors to create a more agile and modern company to accelerate its development and improve the customer experience,” she added.

For his part, Enrique Ostale, executive vice president and CEO of Walmart United Kingdom, Latin America and Africa, said that: “Walmart is committed to building strong, resilient businesses that continuously adapt to local customers’ needs in a rapidly changing world."

He added: “We will retain a stake in Walmart Brazil and continue to share our global retail expertise, giving our Brazil business the best opportunity for long-term growth, providing opportunities for associates and low prices for customers."

Walmart recently sold a majority stake in its British subsidiary Asda to J Sainsbury Plc and paid USD 16 billion for a majority stake in Indian e-commerce firm Flipkart.

The US chain entered Brazil in 1995 and became the third largest retailer in the country after two major acquisitions in 2004 and 2005 and a period of rapid store expansion that stopped in 2013. For seven years, it had been recording operating losses in this country.

Advent is a global fund with extensive experience in retail investment and presence in North America, Europe, Latin America and Europe. It started operations in Brazil in 1997 and since then, it has invested in more than 30 Brazilian companies from different sectors.

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