Walmart hires Goldman Sachs to explore $10b Flipkart IPO in the US

REUTERS/Abhishek N. Chinnappa

Walmart Inc. has hired Goldman Sachs to explore an initial share sale of its Flipkart unit in the US to raise around $10 billion, two people directly aware of the development said.

The Bentonville, Arkansas-based Walmart is planning to sell around 25% in India’s largest online retailer, the people said, requesting anonymity. “Work on the IPO (initial public offering) is on in full swing and the advent of the pandemic has only hastened the process, given the spectacular surge in demand on e-commerce platforms,” said one of the two people cited above.

Online transactions in India have surged after the coronavirus outbreak as people largely stayed indoors and avoided crowded markets and department stores.

The pandemic has pushed millions of new customers from small towns and cities to switch to online platforms, boosting valuations of e-commerce companies. Flipkart, which is based in Bengaluru and registered in Singapore, competes with Amazon.com Inc.’s India unit and Reliance Industries Ltd, which is ramping up its JioMart e-commerce business to challenge its rivals in the online space.

If Flipkart’s IPO plans are successful, it will be the largest by a company based in India on overseas exchanges.

Flipkart’s valuation will also more than double to $40 billion since Walmart’s acquisition of the e-commerce giant. In September, Reuters had reported that Flipkart will go public in 2021. The US retailer had pledged to take Flipkart public in four years after it bought a 77% stake for $16 billion in 2018.

In July, Flipkart raised $1.2 billion in a fresh funding round with Walmart as the lead investor, valuing the company at $24.9 billion.

Walmart now owns an 82.3% stake in Flipkart, with US-based hedge fund Tiger Management, China’s Tencent, Accel Partners and Microsoft Corp., among the other key investors. The IPO will offer an opportunity to minority investors to sell or pare their holdings.

Flipkart’s Indian entities are owned by Flipkart Pvt. Ltd, which was set up in October 2011 in Singapore. Taking the Singapore company public in the US will help Walmart sidestep restrictions on Indian companies listing on foreign stock exchanges.

The Singapore-registered entity owns eight Indian companies, including Flipkart Internet Pvt. Ltd, the company that runs the e-commerce marketplace Flipkart.com; Flipkart India Pvt. Ltd, the wholesale business; and Flipkart Logistics Pvt. Ltd, which runs eKart.

Responding to a query, a Flipkart spokesperson said: “An IPO has always been part of Flipkart’s long-term strategy. However, the focus at present is on growth and democratizing commerce in India through technology, while continuing to unlock customer value.”

A spokesperson for Goldman Sachs declined to comment. An email sent to a Walmart spokesperson on Saturday remained unanswered.

The share sale proceeds are likely to be used to expand Flipkart’s business at a time the e-commerce market is booming. Flipkart’s payments unit PhonePe, which is looking to break even by 2022, is also planning to go public by 2023. Mint first reported on PhonePe’s IPO plans on 22 April.

The digital payments company, which competes with Paytm, Google Pay and Amazon Pay, too, is likely to list on a US stock exchange at a valuation of $10 billion.

While announcing Walmart’s fresh investment in Flipkart in July, the company said that PhonePe processes annualized total payments value of more than $180 billion, and witnesses more than 500 million transactions each month on its app. The company expects at least 275 million users by the year-end.

PhonePe has also set sights on international markets and may look to take its payment solutions business to the US through Walmart.

Over the past few months, Flipkart has not only expanded its customer base and supply chain but has also widened its reach to new pin codes across India.

It has also introduced multiple languages on its platform to attract customers who are not comfortable shopping using the English user interface.

In July, all of Walmart’s India operations were merged into Flipkart as the parent consolidated its operations.

Flipkart started in 2007 by mostly selling books, but later the company expanded into other segments such as consumer electronics, fashion, home essentials, groceries and apparel.

The article was first published on livemint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.