Walmart May Launch IPO For Flipkart In As Early As Four Years

Doug McMillon CEO of Walmart Inc. Adam Jeffery  CNBC  Getty Images

U.S. retail giant Walmart has an option to invest an additional $3 billion in India's largest online retailer Flipkart at the same valuation within a year of completing the acquisition of 77% stake in the company, according to the company's regulatory filings with the USA market regulator, the Securities and Exchange Commission.

Walmart will also have right to appoint or replace the chief executive officer and other principal executives of the Flipkart group of companies, subject to certain consultation rights of the board and the founder.

The filing also said the IPO would be done at no less a valuation than the deal price for the e-commerce firm.

After the deal is made, the minority shareholders in it are Flipkart's co-founder Binny Bansal, China's Tencent Holdings (0700.HK), U.S. hedge fund Tiger Global Management and Microsoft Corp (MSFT.O). Walmart said the transaction to buy shares in Flipkart should close by March 9, 2019.

As a portion of the bargain, wal mart will initially appoint five supervisors to Flipkart's plank, two supervisors will probably be appointed by minority investors whilst Bansal will take a single plank seat, as stated by the filing. (WMT.N) said on Saturday in a filing with a USA regulator that it may take India's Flipkart public in as early as four years, detailing for the first time a potential listing timeline for Walmart's largest-ever acquisition.

Upon the terms and subject to the conditions set forth in the Share Purchase Agreement, contemporaneously with the closing of the Share Issuance, Walmart will purchase from the Sellers Preference Shares and Ordinary Shares of Flipkart for an aggregate purchase price of approximately $14 billion in cash (the "Secondary Share Purchase", and together with the Share Issuance, the "Transactions"). No termination fee would be payable by any party if the Share Issuance Agreement or the Share Purchase Agreement were terminated, it said.

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Furthermore, Walmart has shed some light on its plans to come out with an initial public offering (IPO) for Flipkart.

The minority shareholders of Flipkart will be able to exercise a conditional right of veto over "specified decisions relating to Flipkart's business and activities", the filing said but did not spell out the details.

Walmart or its components could question Flipkart to issue new common shares of up to 3 billion until the closing of their "transactions and before or on the very first anniversary of their final", it also said. However, two board appointees of Walmart will be independent members, the filing noted. "The number of directors may be increased to nine at any time, appointed by Walmart with the approval of a majority of the Flipkart directors and must be unaffiliated with Walmart", read the regulatory filing.

Following the acquisition, all significant stakeholders in the Indian online retail giant like Naspers, venture fund Accel Partners and eBay had confirmed they were selling their stocks to Walmart.

The Economic Times newspaper reported on Friday, citing unnamed sources, that Japan's SoftBank Group, which owns a roughly 20 percent stake in Flipkart, was rethinking its exit due to tax liabilities and because it saw further value in Flipkart.

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