Walmart Inc.-controlled Indian e-commerce firm Flipkart is preparing an initial public offering overseas in early 2021 that could value the firm for up to $ 50 billion, sources familiar with the company’s plans told Reuters.
Bengaluru-based Flipkart, which has players in India and Reliance Industries such as Amazon.com’s local unit, would have to be rated in the $ 45- $ 50 billion range according to a source with knowledge of the case.
If achieved, it means that Walmart would have more than doubled its investment.
Flipkart is likely to opt for an initial public offering (IPO) between Singapore, or the United States, 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 drafted new rules that could 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 attracted not only global giants like Walmart and Amazon, but also India’s oil-to-telecom conglomerate Reliance, which has jumped into the fray.
Reliance launched an online grocery service this year, JioMart, whose billionaire owner Mukesh Ambani told shareholders in July that delivery would expand into electronics and fashion products.