Ahead of the buyout of controlling stakes by global retail giant Walmart, Flipkart is reportedly preparing to buy back shares from small investors as it seeks to regain its private limited company status in Singapore.
According to an ET report, the Bengaluru-based online marketplace has put $400 million in its pocket to drop down the number of shareholders to below 50 to be recognised as a private limited company in the Southeast Asian country.
Currently, Flipkart has about 145 entities as shareholders and to become a private company it has to bring down the numbers to below 50. The private company status will further ease the process of one of the biggest deal in Indian e-commerce history.
However, major shareholders such as Tiger Global and SoftBank are not expected to sell any shares in the latest buyback process. Notably, SoftBank which holds about 21 per cent stake in the Flipkart has given a green signal to it and slated to bag $4 billion exit. On the other side, Tiger Global has about 20.5 per cent share in the e-commerce giant.
Earlier, Flipkart gave partial exits to investors last year through a share buyback after SoftBank invested $2.6 billion in the company in August. The e-commerce player had spent about $1 billion to acquire part of equity held by large investors including Tiger Global and Accel India.
Walmart has been in talks with Flipkart for months to acquire a controlling stake in the firm as it looks to take on rival Amazon in India. The Doug McMillon-led firm is likely to acquire 51 per cent stake, paying anything between $8 billion (Rs 53,450 crore) and $12 billion (Rs 80,180 crore), in Flipkart as early as next week.
Among smaller shareholders, US-based investments firms Vanguard Group and T. Rowe Price own stakes in Flipkart through multiple entities. Besides, Flipkart’s founders Sachin and Binny Bansal, who own little over 5 per cent each also likely to part sell their stakes.
Binny Bansal whose shareholding fell from 7.6 per cent to 5.2 percent, when he sold shares worth $30-35 million in the secondary buyback led by SoftBank last year may take exit from the company.