NEW DELHI / BENGALURU : Indian e-commerce company Flipkart, controlled by Walmart Inc, is preparing for an overseas initial public offering starting in 2021, which could value the company up to $ 50 billion, sources familiar with the plans told Reuters. the company.
Bengaluru-based Flipkart, which competes with players such as Amazon.com’s local unit in India and Reliance Industries of India, will target a valuation in the range of $ 45 to $ 50 billion, according to a source with knowledge of the affair.
If successful, that would mean that Walmart would have more than doubled its investment.
Flipkart is likely to choose between Singapore or the United States for the initial public offering (IPO), said two other sources, who asked not to be named as the discussions are private.
“Flipkart is incorporated in Singapore, but listing in the United States, where parent Walmart is based, could give you access to a deeper pool of funds,” said one of the sources.
Flipkart and Walmart did not respond to Reuters requests for comment.
Sources said preparations and discussions have largely been internal for now, but the company is preparing to turn to outside advisers in the process soon.
The discussions come as India drafts new regulations that could pave the way for domestic companies to list directly abroad.
Two other sources familiar with the plans said work has begun to ensure compliance, legal and financial functions meet regulatory standards before a possible listing.
“Right now, the IPO target is considered around the end of 2021 or early 2022, but the current crisis has made things a bit blurry,” said one of these two sources.
The second person added that being “IPO ready” has become a constant refrain at high-level meetings internally.
Excellent observed valuation
Walmart acquired a roughly 77% stake in Flipkart for around $ 16 billion in 2018. That deal remains the largest foreign direct investment in India.
It made Flipkart founders Sachin Bansal and Binny Bansal billionaires, and confirmed Flipkart’s status as the most successful startup in the country at the time.
Later that year, Bentonville, Arkansas-based Walmart, in a regulatory filing, said it could make Flipkart public in four years.
In July of this year, Flipkart raised $ 1.2 billion in new funding with Walmart as its primary investor. That round valued Flipkart, which counts China’s Tencent, US hedge fund Tiger Global and Microsoft among its investors, at $ 24.9 billion.
Flipkart said it would use the funds, to be received in two tranches this fiscal year, to support the development of its e-commerce marketplace as India emerges from the COVID-19 crisis.
Like its rival Amazon, Flipkart started out by selling books but quickly branched out to sell smartphones, clothing, and other items. It now competes with Amazon in most categories.
India’s e-commerce sector is expected to be worth $ 99 billion by 2024, according to Goldman Sachs, as more Indians switch to online shopping.
That expanding market has attracted not only global giants like Walmart and Amazon, but also India’s oil-to-telecoms conglomerate Reliance, which has jumped into the fray.
Mumbai-based Reliance this year launched an online grocery service, JioMart, and its billionaire boss Mukesh Ambani told shareholders in July that deliveries will expand to electronics and fashion.
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