As Walmart-owned Flipkart is gunning for an IPO later this year, there could be challenges galore to upset the apple cart
On the regulatory side, the FDI in ecommerce policy has adversely impacted the two US giants, Flipkart and Amazon, cutting their GMVs by huge margins. The US Congressional Research Service termed this as a barrier between the two countries’ trade relations
Flipkart has a proven revenue model, lion’s share in the Indian ecommerce market, and thus would be a jackpot for US investors, believe experts
“…So, we’re not really getting hung up on the valuation in the short term. Over time, I think everybody will understand just how valuable that business in India is, whether it’s the Flipkart portion or the PhonePe portion,” Douglas McMillon, president, chief executive officer and director, Walmart, Inc
Now that we are a month into 2021 and the initial shock of the Covid-19 pandemic has worn off, public markets are buzzing and businesses seem to be entering one of the much-desired boom periods. Even in 2020, in the midst of a global shutdown and an unprecedented economic slide triggered by the coronavirus crisis, the likes of Airbnb and DoorDash had seen the biggest and the buzziest IPOs come off. Buoyed by the global outcomes, startups in India do not want to sit on the sidelines and miss out on the public market cash and valuations.
More than half a dozen tech startups and consumer-facing internet companies such as Zomato, Nykaa, PolicyBazaar, Delhivery, MobiKwik, Freshworks and Flipkart are looking to get listed later this year, an endorsement and trust transition from private investors to the open market. But out of all the startups scrambling to go public, all eyes are bound to be on Flipkart, the Walmart-owned e-commerce behemoth.
The reasons are many. To start with, Flipkart is gunning for a US IPO in Q4, 2021, says an analyst who had earlier worked on Flipkart’s acquisition deal. To meet the 2021 IPO deadline set by its parent company Walmart, Flipkart has reportedly hired investment bank Goldman Sachs and is preparing to divest 25% of its stake at a valuation of $40 Bn. Flipkart is currently valued at $25 Bn, which means it is aiming to raise $10 Bn through the IPO.