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Walmart may bring an IPO to make Flipkart public in as little as 4 years

Alnoor Peermohamed/Bengaluru 13 May 18 | 12:11 AM

US retail giant Walmart is looking to retain Flipkart co-founder Binny Bansal and other minority investors such as Tiger Global for at least four years, promising that it will protect the valuation of their shareholding and offer them the potential upside of taking the company public.

In a filing with the US Security and Exchange Commission (SEC) on Friday, Walmart said it would allow the initial public offering (IPO) of Flipkart in four years at a valuation no less than what it invested in the e-commerce firm, if a grouping of minority shareholders asks for it. 

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Walmart announced on Wednesday it was acquiring a 77 per cent stake in Flipkart at a valuation of $20.8 billion.

“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 at a valuation no less than that paid by Walmart under the share issuance agreement," the filing read. The clause will help Walmart persuade Binny and Flipkart CEO Kalyan Krishnamurthy, who was a top executive at Tiger Global, to stay with the firm for a period of at least four years. This is to ensure that Walmart is not prematurely left with ownership of a company that it does not know how to run, according to experts.

At the time of announcing the deal, Walmart had said it supported the Flipkart management’s desire to go public in future. The resulting entity would be a publicly-listed, majority-owned subsidiary of Walmart, it said. The proposed IPO gives minority shareholders a reason to stay invested, as they could potentially augment the value of their shareholding.

Apart from outlining Flipkart’s IPO plans, Walmart also detailed other clauses of its shareholding agreement, including the constitution of the Flipkart board for the next two years.

Flipkart’s board of directors, it said, would initially have eight members, five of which would be appointed by Walmart, two by certain minority shareholders, and one would be Binny Bansal. Of the five directors Walmart can appoint to Flipkart’s board, two must be unaffiliated to the Bentonville, Arkansas-based company. 

Walmart’s filing also said it might appoint or replace chief executive officer and other principal executives of the Flipkart group of companies, subject to certain consulting rights of the board and the founder. However, Walmart has so far expressed that it fully supports the current management of Flipkart.

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Another clause that Walmart has put into the agreement is that it has the right to invest an additional $3 billion into Flipkart at the same valuation of its initial purchase. If this happens, then Walmart’s shareholding in the Indian e-tailer could go up by a further 12-14 per cent, pushing its shareholding beyond 85 per cent. 

Once Walmart owns more than 85 per cent of Flipkart, several rights of minority shareholders, including Tiger Global, Binny Bansal, Microsoft, Tencent and others, will be revoked such as their veto right to “prevent certain significant transactions or other events involving Flipkart", their right to refusal and even their “drag along" rights.

Walmart said on Wednesday it and Flipkart were in talks with other investors to potentially take part in a funding round. Among potential investors in the company is Alphabet, the parent company of Google, which has been in discussions with both the parties to invest as much as $3 billion into Flipkart. Google’s backing could give Walmart and Flipkart the tech backing they require to take on Amazon. 

For the Mountain View company, the move could give it access to India’s fast-growing online retail and digital payments markets, apart from a front to sell its Pixel and Home hardware lines in the country.


Walmart has the right to appoint or replace CEO and other top executives at FlipkartIt has the right to invest $3 billion more into the Indian e-commerce firm at the same $20.8 billion valuationWill take Flipkart public after four years at a valuation no less than what the US retail giant has investedWill appoint five members to Flipkart’s initial eight-member board of directorsTwo of the Walmart-appointed directors to Flipkart’s board will not be affiliated to it

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