Flipkart IPO With $35 Billion Valuation: Walmart to take the SPAC Route

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Flipkart IPO could turn out to be the biggest success story of an Indian startup unicorn.

The face of the Indian e-commerce, Walmart-owned Flipkart has certainly quickened its steps towards a much-awaited IPO. The path it has zeroed in for the process – the enrapturing SPAC route!

According to a fresh series of developments, Flipkart IPO would be launched in the US through a merger with a blank-check company.

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The online retailing giant has had an eye on a possible initial IPO in the US for quite some time. Now mulling other options, Flipkart’s advisors have reportedly already approached several SPACs, seeing a valuation in the range of $35 billion for a blank-check transaction.

According to information shared by people in the know, the exploration of this particular avenue is a bid to fan the listing to a brisk conclusion.

It is indeed a fact that merging with a SPAC will allow Walmart to take its India unit to the market at a faster pace as compared to the usual IPO route. That being said, deliberations for any future move are ongoing, and Flipkart is expected to canvass every alternative before giving the go-ahead on a potential SPAC merger.

SPAC, which has become a buzzword in the biz world, is a shell company that raises money through an IPO to merge with another firm, allowing that business to list that much more quickly. Becoming more prevalent due to the volatile nature of the market thanks to the pandemic, roughly 200 SPACs went public in 2020, raising a staggering $64 billion in total funding as a result, according to Renaissance Capital.

SPACs have quickly established itself as a validated antidote for dispelling any fear that the market volatility could hamper their stock’s public debut. A SPAC merger allows a company to go public and get a capital influx in a lesser timeframe than it would have with a conventional IPO, saving some valuable time by circumventing the “grueling process” process of registering an IPO with the SEC, which alone can take up to six months. As a matter of fact, SPACs have mostly been listed in the US, raking in a record $83.4 billion through IPOs last year, according to SPAC research.

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As whispers about Flipkart IPO debut take flight, as many as 10 other Indian companies are also expected to go public through SPAC before the year-end, according to Utpal Oza – head of investment banking for India at Nomura Holdings.

The e-commerce form will also join other Indian counterparts in online grocery delivery player Grofers and ReNew Power in exploring a U.S. listing through SPAC deals. The latter, which only last week signed on the dotted line to merge with a US-listed special purpose acquisition company in a deal that will bolster India’s biggest renewable power producer’s enterprise value to $8 billion.

Fuelled by an improving economic outlook, Burger King India has also been among those to opt for an IPO in the last few months of 2020.

At this stage, launching a Flipkart IPO makes perfect sense. Closer than ever before to a listing, a merger through the SPAC option will be a significant step for Flipkart which didn’t shy away from burying Jabong in this pursuit recently. Flipkart valuation has soared over 800 times since 2009, providing an ample chance for Walmart to double its investment, after acquiring a majority stake in the Bengaluru-based company in 2018 for $16 billion.

Walmart’s US e-commerce sales increased a strong 69% with strong results across all channels. The American retail giant posted total revenue of $559.2 billion, an increase of $35.2 billion at 6.7% YoY growth, in the fiscal year 2021.

Getting excited by the upcoming Flipkart IPO, might it pave way for more companies looking to tread on the same route? We’ll find out in good time.

For now, Flipkart has to do the diligence on its next mooted step.

 Stay tuned for more updates.

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