New Delhi / Bangalore:
Walmart Inc.-controlled e-commerce firm Flipkart is preparing an initial public offering (IPO) overseas in early 2021 that could value the firm for up to $ 50 billion, sources familiar with the company’s plans told the news agency Told Reuters. According to a source privy to the case, the Bangalore-based Flipkart, which is with the Indian arm of Amazon.com and players like Reliance Industries, will target valuations in the $ 45- $ 50 billion range. If achieved, it means that Walmart would have more than doubled its investment.
Flipkart is likely to choose between Singapore, or the US, for an initial public offering, with two other sources stating that those whose names should not be discussed are private.
According to sources, “Flipkart is incorporated in Singapore, but the listing in the United States, where the parent Walmart is headquartered, could provide access to a deeper pool of funds.”
Flipkart and Walmart did not respond to Reuters requests for comment.
Sources said the preparation and deliberation is largely internal for now, but the company is preparing to tap external consultants on the process soon.
As discussed, the government drafts new rules that can pave the way for bringing domestic companies directly into the foreign list.
Two other sources familiar with the plans said work has begun to ensure compliance, legal and finance functions will meet regulatory standards ahead of a possible list.
“Right now, the IPO is supposed to be more or less the end of 2021 or 2022, but the current crisis has blurred things a bit,” one of these two sources said.
The second person stated that being “IPO ready” there has been a steady decline in top level meetings at the internal level.
Walmart acquired an approximately 77 percent stake in Flipkart in 2018 for approximately $ 16 billion. The deal is the largest foreign direct investment in India.
This turned Flipkart founders Sachin Bansal and Binny Bansal into billionaires, and confirmed Flipkart’s status as the country’s most successful start-up at the time.
Later that year, in a regulatory filing, Bentonville, Arkansas-headquartered Walmart said it could make Flipkart public in four years.
In July this year, Flipkart raised $ 1.2 billion in new funding with Walmart as its principal investor. Flipkart was valued at that time, which counts China’s Tencent, US hedge fund Tiger Global and Microsoft among its investors for $ 24.9 billion.
Flipkart said it would use the funds it received in two installments this financial year to support the growth of its e-commerce marketplace as India emerges from the COVID-19 crisis.
Like its rival Amazon, Flipkart began selling books, but sales of smartphones, clothes, and other items quickly diversified. It now competes with Amazon in most categories.
According to Goldman Sachs, India’s e-commerce sector is expected to be $ 99 billion by 2024, as more Indians visit online shopping.
That expanding market has not only attracted global giants like Walmart and Amazon, but is also giving a boost to India’s oil-to-telecom conglomerate Reliance Industries, which has jumped into the fray.
Mumbai-based Reliance Industries launched an online grocery service, JioMart, in July this year with its billionaire boss Mukesh Ambani, stating that delivery will expand into electronics and fashion products.