Flipkart is reportedly in early talks with investors to raise at least $1 billion ahead of a potential initial public offering (IPO) in the U.S. in the fourth quarter of 2021, according to The Economic Times. The investment total could reach as much as $2 billion.
There have been rumblings that the Indian e-commerce giant has mulled plans for a U.S. IPO for the better part of half a year.
Walmart currently owns 82 percent of Flipkart, leading a $1.2 billion financing round in July 2020 that brought its estimated valuation to $24.9 billion, but an IPO could possibly double that total to as much as $50 million.
However, an IPO still isn’t a guarantee, with one source involved with the process telling the Times that “the capital raise is not being positioned as pre-IPO, but for expansion.” Raising money via a special-purpose acquisition company (SPAC) is a backup option, the anonymous executive said.
The potential new investor pool includes sovereign wealth funds, technology-focused financial groups, pension funds, long-term passive funds and private equity funds, the Economic Times said. Though the Flipkart fundraising is predominantly being targeted at new investors, existing ones like GIC of Singapore, Qatar Investment Authority have been sounded out.
JPMorgan and Goldman Sachs are advisers in the fundraising, the report said.
Flipkart and Walmart did not immediately respond to Sourcing Journal’s request for comment.
Flipkart is in the midst of a competitive e-commerce battle with Amazon’s growing operation in India as well as Reliance Retail, which has a massive brick-and-mortar operation and is owned by India’s richest person, Mukesh Ambani. Reliance and Amazon have been trapped in an ugly back-and-forth legal battle, in which the former has sought to acquire Future Retail Group, which Amazon holds a minority stake in. India’s Supreme Court deferred the hearing of the dispute over Future to June 28.
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Overall, India’s e-commerce market is estimated to reach more than 300 million shoppers by 2025, buying a total of $100 billion on online platforms, according to estimates by Bain & Company.
But amid the e-commerce growth, India has been bombarded with coronavirus cases, which have doubled from 10 million in December to 20 million in May, according to the World Health Organization, making the overall retail environment a rough one to navigate. Amid the health concerns, Amazon even cancelled Prime Day in India, news reports said.
And while e-commerce boomed worldwide in response to the mass store closures, some states in India are even enforcing restrictions on servicing non-essential items on e-commerce platforms.
In response to the spread of the virus and the ensuing lockdowns, Flipkart said it is working to strengthen its online grocery infrastructure as it expands the new category. Flipkart plans to expand its fulfillment center capacity by adding 800,000 square feet of space within five new fulfillment centers over the next three months. The added capacity will help Flipkart cater to more than 73,000 grocery orders per day, the company says.
The company also exempted storage fees for sellers to curb the impact that any seller may have on their inventory that is fulfilled through its fulfillment centers. Flipkart is also waiving off the cancellation fee till May 31 for orders that may have been cancelled due to lockdowns in various states.
“Through these testing times it is our constant effort to support our seller partners who face immense operational challenges as a result of the pandemic,” said Jagjeet Harode, senior director and head, marketplace, Flipkart, in a statement. “As a democratic marketplace, we want to ensure that our lakhs of seller partners are able to continue operations and keep the economic engine running. With them and their family’s financial and health safety in mind, we have rolled out these initiatives that will bring them the much-needed respite to keep their businesses active.”
Flipkart seeks growth with travel acquisition, EV partnerships
Flipkart has also sought to increase its value in other ways ahead of any potential public filing. The company acquired online travel technology company Cleartrip in April to strengthen its digital commerce offerings.
“Cleartrip is synonymous with travel for many customers, and as we diversify and look at new areas of growth, this investment will help strengthen our wide range of offerings for customers,” said Kalyan Krishnamurthy, CEO of Flipkart Group, in a statement.
Additionally, Flipkart partnered with Mahindra Logistics Limited (MLL) as one of its key logistics partners to help fast track deployment of electric vehicles (EVs) across its logistics fleet in the country.
Flipkart has committed to 100 percent electric mobility in its logistics fleet and will deploy more than 25,000 EVs by 2030. As part of the commitment, Flipkart already has partnered with leading EV manufacturers including Hero Electric and Piaggio to deploy vehicles in its logistics fleet across the country.