Flipkart set to be a private firm to facilitate Walmart
bengaluru — India’s e-retail major Flipkart has turned into a private company from a holding firm, ostensibly for a strategic buyout soon by the world’s largest retail firm Walmart, according to documents it filed for regulatory approvals.
“Documents filed by Flipkart with Singapore’s Accounting and Corporate Regulatory Authority [Acra] indicate that the holding company has become a private firm — Flipkart Pte Ltd in Singapore where it is registered,” business intelligence platform Paper.vc Founder Vivek Durai told IANS.
In a regulatory filing with the Acra on Thursday, the city-based e-commerce behemoth said it concluded a second buyback of shares from a set of its investors for $350.46 million in a transaction that closed on April 27.
“The buyback and the subsequent conversion to private company status appear to be part of a series of steps aimed at easing a proposed acquisition by Walmart,” Chennai-based Durai said.
Though the buyback was on April 27, Flipkart filed the documents on May 3. It has obviously paid from the $2.5-billion funds it raised from Soft Bank Vision Fund, Microsoft, eBay and other investors last year. “The buyback will enable the e-commerce giant to bargain for a favourable deal with the USbased Walmart, which is eyeing a majority or controlling equity stake in it to foray into the multi-billiondollar Indian retail space,” a market analyst told IANS earlier.
The company purchased 1,895,574 redeemable preference shares and 174,319 non-redeemable preference shares for $350.46 million from a set of investors in a transaction that closed on April 27. The decade-old firm’s first buyback of shares was on December 7, 2017 when it spent a whopping $869.15 million to buy 7,283,175 redeemable preference shares and 2,301,456 non-redeemable preference shares at $85.3 per share.
“As the company needs to have 50 shareholders to become a private entity, 94 of the 144 shareholders would have exited in the twin buyback rounds, while the remaining, would have partially [1550 per cent] sold their equity stake,” hinted Durai.
According to another analyst who declined to be named, Flipkart has converted into a private firm so that Walmart could come on board as a strategic investor for controlling stake after the exit of so many institutional and individual investors. —