Startups, investors, and tax are inseparable in India, irrespective of clout as well as stage. While early-stage startups and their backers are fighting for waving off angel tax completely, heavyweight investor SoftBank is also eyeing a leeway to save tax in India’s startup poster child Flipkart exit event.
The Japanese heavyweight is likely to delay over one-fifth (about 21 per cent shareholding) sale to Walmart in a staggering buyout worth $15 billion.
SoftBank may retain all of its stakes for at least one year more to avoid paying a large tax, reports Mint citing anonymous sources. Walmart is an inch closer to buy about 75 per cent stake, largely consists of secondary share from SoftBank, Tiger Global, Accel Partners, Naspers amongst others.
Tiger, Naspers, and Tencent are said to hold partial equity post-Walmart acquisition. Unlike most of its investment where SoftBank backs companies till IPO, it had decided to sell its $2.5 billion staggering eight months old bet on Flipkart to Walmart in $4 billion.
Importantly, the Masayoshi Son-led investment giant is yet to take a call on timing as well as the amount of sale of its equity in the Singapore-registered Flipkart, added the report.
Also read: Finally DIPP eases angel tax rules, but there’s a catch
Currently, SoftBank is in talks with tax experts to save as much tax it can in an ongoing buyout by Walmart. It would likely to come up with concrete roadmap about its dilution in Flipkart by the next week.
After a long discussion over the deal, Flipkart board had reportedly approved the buyout of 75 per cent equity to Walmart for $15 billion. The online marketplace’s co-founder Sachin and Binny Bansal are likely to exit while its chief executive Kalyan Krishnamurthy also sets to move from the company this year.
The timeline for Krishnamurthy movement is not clear, however, he would anticipate returning to Tiger Global with a larger role in the US-based hedge fund.
While early-stage startups in India are still to get clarity on exorbitant angle tax (subject to capital gain on raised capital), SoftBank amongst several VCs deliberately convinced portfolio companies to register their entity to Singapore or other tax saving destinations.