Flipkart, the Walmart Inc.-owned Indian e-commerce giant, is making progress toward an initial public offering (IPO) as soon as the fourth quarter of this year, according to a report by Bloomberg.
Walmart has set up an internal IPO team for Flipkart and is leaning toward a traditional debut in the U.S. with the startup’s valuation in contention to top $35 billion as it goes public. To speed up the listing process, Flipkart had explored going public through a blank-check company, but that route is not being considered now.
The U.S. retail giant’s shares rose as much as 1.1% to $140.92 on Tuesday in New York trading, before retreating back to unchanged, after Bloomberg News reported on the potential IPO.
The IPO process is being driven by Saroj Panigrahi, a former JPMorgan Chase & Co. attorney hired by Flipkart in December. According to Bloomberg, “JPMorgan and Goldman Sachs Group Inc. are in discussions with the company about advising on the deal and are frontrunners to be formally selected, they added.”
Bloomberg’s sources have also informed that the IPO discussions are not yet confirmed and could change. It’s possible Flipkart would ultimately opt for a location other than the U.S.
During the uncertainties of the coronavirus pandemic, E-commerce has emerged as a clear winner, with surging demand around the world prompting investors to bet on the future of the business. Coupang Inc., a South Korean e-commerce company, in March, went public in the U.S. in an offering where investors quickly pushed its valuation to more than $75 billion.
Amazon.com Inc., which rivals Flipkart in India, last year, saw its shares soar more than 75%. It’s now valued at more than $1.6 trillion.
“Flipkart’s IPO will be a large, exciting public offering and a very significant milestone for India’s startup ecosystem,” said Neha Singh, co-founder, and chief executive officer of private market intelligence researcher Tracxn Technologies Pvt.
A rush of startups are headed towards the public markets this year and next in India, including Policybazaar and Zomato.
Flipkart was acquired by Walmart in 2018 after it was founded in 2007. Today, Flipkart includes Flipkart Wholesale, its digital marketplace targeted at small and medium businesses, and the fashion retailer Myntra. It has over 300 million registered users, over 150 million products in over 80 categories.
Initially met with skepticism, the Walmart purchase followed a tumbling share price. The U.S. giant has struggled to make a profit in e-commerce and investors fretted it was overpaying for a money-losing business overseas.
Flipkart getting a successful stock market debut could put an end to any nagging concerns.
”With the IPO, all doubts will be quelled and Walmart will have come full circle,” Singh said.
The law firm Shardul Amarchand Mangaldas & Co. will represent Flipkart in India.