Flipkart sets aside $400 mn for share buyback ahead of Walmart deal

Flipkart has set aside $400 million to buy back shares from small investors as it seeks to regain its private limited company status in Singapore ahead of a probable investment from Walmart, according to an Economic Times report citing three people aware of the development.

India’s largest online retailer, which is registered as a public company in Singapore, needs to reduce its number of shareholders to below 50 to be recognised as a private limited company in the Southeast Asian country.
Flipkart has about 145 entities as shareholders, as per its filings with Singapore’s Accounting and Corporate Regulatory Authority. Major shareholders such as Tiger Global and SoftBank are not expected to sell any shares in the buyback exercise.
According to an expert cited by ET, if a strategic investor is coming in, it would be easier for the investor if the number of shareholders is below 50, as if it is above 50, the entity becomes a public company in Singapore and the compliance requirements are greater.
Flipkart did not respond to queries sent by ET. Walmart declined to comment.
As reported earlier, Walmart is in advanced talks to buy up to 86 per cent of Flipkart in a deal expected to involve Tiger Global and SoftBank selling part of their stakes in the Indian online retailer to the Bentonville-based giant.
Tiger Global and SoftBank are largest shareholders in Flipkart, holding 20 per cent each in the company. Among smaller shareholders, US-based investments firms Vanguard Group and T Rowe Price own stakes in Flipkart through multiple entities.
Bengaluru-based IDG Ventures owns Flipkart shares through two funds and Russian billionaire Yuri Milner-led DST Asia via four funds, as per ACRA filings.
Flipkart facilitated partial exits to investors last year through a share buyback after SoftBank invested $2.6 billion in the company in August. Flipkart spent about $1 billion to acquire part of equity held by large investors including Tiger Global and Accel India.
Walmart may get up to four seats on Flipkart’s board of 10 directors. The Indian online retailer is expected to continue as an independent company, retaining its top management including founders Sachin Bansal and Binny Bansal and chief executive Kalyan Krishnamurthy (See: Walmart may get 3-4 seats on Flipkart board after stake purchase).