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Walmart may launch IPO for Flipkart in as early as four years

15 May 2018

Tencent Holdings (TCEHY), Microsoft (MSFT), Tiger Global Management and Flipkart co-founder Binny Bansal make up part of the company's minority shareholder base.

Walmart's Flipkart acquisition, the world's largest e-commerce deal, is an all-cash transaction, according to the SEC filing. This has turned Indian e-commerce battle into three-way involving Walmart, Amazon and Alibaba, which is backed by the Japanese conglomerate.

After competing against Amazon for years in e-commerce, Walmart revealed on May 9 that it outbid the tech giant for Flipkart and will pay $16 billion to buy a 77 percent stake in the Indian e-commerce company. The investment implies a valuation of almost $21 billion for Bengaluru-headquartered Flipkart. The deal still has to face Indian regulators. The latter, incidentally, will remain one of Flipkart's largest minority shareholders in Flipkart after the Walmart deal.

"Flipkart's talent, technology, customer insights and agile and innovative culture will benefit Walmart in India and across the globe", Walmart said in a media advisory.

"Amazon already has a substantial foothold in India at 27% market share, and Walmart knew they needed to get into that market either by acquiring Flipkart or taking market share away", said Neiweem.

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Startup industry experts see the bonanza for Flipkart employees creating a very positive story for Esops in India, in a reversal from the last two years when employee stock options had become less attractive following several shutdowns and valuation drops.

That deal could be sealed before the close of the Walmart-Flipkart transaction or immediately after, a source told Reuters, declining to be named as the talks are private. But Flipkart's board reportedly believed a deal with Walmart had a better of chance of passing regulatory muster.

Worth mentioning here is that SoftBank in April had chose to invest Dollars 400 million (about Rs 2,600 crore) for a 21 per cent stake in Paytm Mall.

Earlier, Masayoshi Son - founder and Chief Executive Officer of SoftBank - pledged to invest Dollars 10 billion (about Rs 67,000 crore) in India. Now with Walmart as an investor, Flipkart will be able to leverage the USA giant's grocery and general merchandise supply-chain knowledge to build this category, something which Flipkart has piloted in Bengaluru but has not been able to scale up significantly.

A spokeswoman for SoftBank in India declined comment.

Walmart may launch IPO for Flipkart in as early as four years