Moving closer to its deal with Walmart, e-commerce major Flipkart has bought back over 1.8 million shares worth more than $350 million from minority investors, as per information filed by Flipkart with Singapore’s Accounting and Corporate Regulatory Authority. The filing, which was sourced by data platform Paper.vc, claimed that the move will also help Flipkart convert itself into a private company under Singapore law and values the Bengaluru-based firm at a whopping USD 17.69 billion.
The development assumes significance as US retail giant Walmart is close to sealing its deal to acquire majority stake in Flipkart. If completed, this would be one of the largest deals in the Indian retail sector and by far, the biggest in the country’s booming e-commerce market. There is also buzz that Flipkart rival, Amazon, has made a formal bid, priced slightly higher than Walmart along with a breakup fee of USD 2 billion, to buy majority stake in the Indian e-commerce company founded by Sachin Bansal and Binny Bansal.
As per the documents cited by Paper.vc, Flipkart has purchased 18,95,574 redeemable preference shares and 1,74,319 non-redeemable preference shares in a transaction that closed on April 27. According to market watchers, the move is aimed at helping Walmart buy stake from a single entity rather than multiple parties. Flipkart had undertaken a similar move earlier this year, following the closing of its Softbank-Microsoft-Ebay deal.
However, unlike the previous transaction, the current share purchase is easing the exit of a number of Flipkart’s minority shareholders. Shareholders who are said to be exiting include Shekhar Kirani of Accel, Deep Nishar (SoftBank) and a large number of pension funds, according to Paper.vc. This would still leave biggies like Tiger Global, Accel, Microsoft, Naspers and Ebay on the deal table, it said adding that Flipkart’s holding company is now a private company – Flipkart Pte Ltd.
According to sources, Walmart is expected to pump in as much as USD 12 billion for primary and secondary shares, valuing Flipkart at about USD 20 billion — far higher than the USD 17.6 billion valuation of the current buyback. India is a critical market for both Walmart and Amazon, and a deal with Flipkart would help either player in consolidating their position in the booming e-commerce market here.