Walmart may launch IPO for Flip­kart in four years

Walmart has said that it will pay $16 bil­lion for a roughly 77% stake in Flip­kart.

The Sunday Guardian - - Business - REUTERS

Ar­kan­sas- based re­tailer said in a 11 May fil­ing with the US Se­cu­ri­ties and Ex­change Com­mis­sion.

The initial pub­lic of­fer­ing should be done at no less a val­u­a­tion than that at which Walmart in­vested in the In­dian e-com­merce firm, the fil­ing said.

Walmart an­nounced ear­lier this week that it will pay $16 bil­lion for a roughly 77% stake in Flip­kart in what is US re­tail gi­ant’s largest-ever deal and a move to take on arch ri­val Ama­zon. com in a key growth mar­ket.

The in­vest­ment im­plies a val­u­a­tion of nearly $21 bil­lion for Ben­galuru-head- quar­tered Flip­kart.

Mi­nor­ity share­hold­ers af­ter the deal in­clude co-founder Binny Bansal, China’s Ten­cent Hold­ings, US hedge fund Tiger Global Man­age­ment and Mi­crosoft Corp.

The deal now awaits clear­ance from In­dia’s anti-trust reg­u­la­tor and is ex­pected to close later this year.

As part of the deal, Walmart will ini­tially ap­point five di­rec­tors to Flip­kart’s board, two di­rec­tors will be named by mi­nor­ity share­hold­ers while Bansal will take one board seat, ac­cord­ing to the fil­ing.

Walmart said it may, in fu- ture, ap­point a sixth board mem­ber with the ap­proval of the ma­jor­ity of the Flip­kart di­rec­tors.

It also said it could ap­point or re­place Flip­kart’s chief ex­ec­u­tive and other key ex­ec­u­tives of group com­pa­nies in con­sul­ta­tion with Bansal and the board.

Walmart or its units could ask Flip­kart to is­sue new or­di­nary shares of up to $3 bil­lion be­fore the close of the “trans­ac­tions and on or be­fore the first an­niver­sary of the clos­ing”, it said.

Reuters pre­vi­ously re­ported that Google-par­ent Al­pha­bet was in talks to in­vest about $3 bil­lion for a rough- ly 15 % stake in Flip­kart.

That deal could be sealed be­fore the close of the Walmart-Flip­kart trans­ac­tion or im­me­di­ately af­ter, a source told Reuters, de­clin­ing to be named as the talks are pri­vate.

Walmart also said no party would be li­able to pay a ter­mi­na­tion fee if a share is­suance or pur­chase agree­ment with Flip­kart were ter­mi­nated.

The Eco­nomic Times news­pa­per re­ported on Fri­day, cit­ing un­named sources, that Ja­pan’s SoftBank Group, which owns a roughly 20 % stake in Flip­kart, was re­think­ing its exit due to tax liabilities and be­cause it saw fur­ther value in Flip­kart.

SoftBank Chief Ex­ec­u­tive Masayoshi Son has said that their in­vest­ment in Flip­kart had grown to al­most $4 bil­lion.

That growth came just 9 months af­ter SoftBank used its Vi­sion Fund to in­vest about $2.5 bil­lion in Flip­kart.

A spokes­woman for SoftBank in In­dia de­clined com­ment. For­mer Ama­zon em­ploy­ees Sachin and Binny Bansal founded Flip­kart in 2007 and, just like Ama­zon, be­gan by sell­ing books.

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