Publicado: Lun, May 14, 2018
Financiera | Por Marilu Caballero

Walmart May Launch IPO For Flipkart In As Early As Four Years

Walmart May Launch IPO For Flipkart In As Early As Four Years

Walmart Inc can invest an additional capital of $3 billion in Flipkart, anytime within a year of the completion of its transaction of buying 77% stake in the Indian online retailer, the world's largest brick-and-mortar retailer, said in a filing to the US Securities and Exchange Commission.

Even it would appoint or replace Flipkart's chief executive and other key executives of group companies after consulting Bansal and the board.

For the first time, Walmart said the agreement also confers on it the right to seek an issue of a second tranche of fresh Flipkart shares "at any time after the closing of the transaction and on or before the first anniversary of the closing" for an aggregate purchase price of up to $3 billion.

Flipkart's minority shareholders after the deal include co-founder Binny Bansal, China's Tencent Holdings, US hedge fund Tiger Global Management and Microsoft Corp.

Flipkart's board will be initially comprised of eight directors including five Walmart-appointed directors of which two directors must be unaffiliated with Walmart for at least two years after transaction close. Walmart's regulatory filing assumes significance at a time when Flipkart's key shareholder, Japanese internet and telecoms giant, SoftBank, was learnt to be undecided about the sale of its shares, as we reported in our May 11 edition.

Walmart said it can, in future, reconstruct a board member together with the approval of the majority of those Flipkart supervisors.

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So far, Walmart has not revealed the price at which it bought Flipkart stake, and different tranches may have been purchased at different prices.

Walmart added that no party will pay any termination fee to Flipkart if it does not go ahead with a share issuance or purchase agreement with the e-commerce firm.

Devangshu Dutta, chief executive of retail consultancy Third Eyesight, said the infusion in itself is a significant measure of confidence that Walmart has, "that Flipkart is something which needs to be supported not only in terms of integrating it into the Walmart business but also as an independent [business]", said Mr. Dutta.

As per SEC filing, Walmart may take Flipkart public in four years.

"Pursuant to a registration rights agreement to be entered into concurrently with the shareholders agreement, holders of 60 per cent of the Flipkart shares held by the minority shareholders, acting together, may require Flipkart to effect an initial public offering following the fourth anniversary of closing of the transactions", it said. These rights will, however, expire if Walmart increases its stake to 85% or more, the retail giant noted in the filing.

"Shareholders agreement would expire upon the consummation of the IPO, whether initiated by the board or the minority stockholders", it added. For now, Walmart is pumping $2 billion in cash and purchasing shares worth $14 billion from Flipkart's existing shareholders, the SEC filing said. While it was earlier believed that Masayoshi Son's SoftBank would sell its entire stake, reports now say that it has not yet taken any decision on the sale of its over 20 per cent stake in Flipkart.

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