Walmart may get 3-4 seats on Flipkart board after stake purchase
30 April 2018
US retail giant Walmart, which is in negotiations for a large stake in Flipkart, may be given three or four seats on the ten-member board of the online retailer, which will continue to be run as an independent company if the deal goes through, The Economic Times reported citing three people aware of the discussions.
Founders Binny Bansal and Sachin Bansal and chief executive officer Kalyan Krishnamurthy will remain in their current posts as the country’s most valuable startup targets a potential public offer in the future, the report says.
“Flipkart will keep its “startup culture” to battle Amazon”, said one of the people, indicating that there will be no change in the top management pattern if the deal goes through. Binny is currently the group CEO of Flipkart while Sachin is the executive chairman.
An offer from rival Amazon to invest in Flipkart is yet to come, despite reports to this effect, the ET report says.
Japan’s Softbank, which owns over 20 per cent of Flipkart, is said to be in favour of an offer from Amazon but other investors are wary as they believe that such a deal could run into trouble with competition regulators.
With Walmart expected to invest over $12 billion into Flipkart, industry insiders ET spoke to were of the view that the Bentonville-headquartered conglomerate would look to control finance and legal matters at the entity. “They may get a CFO at the helm and legal compliance will be handled by Walmart,” said one of the persons cited above.
Flipkart’s negotiations also include a clause saying that the company can go for a public offering, said one of the people privy to the discussions. Another person said, “Flipkart is taking a longer-term view … they want everyone to be incentivised for an IPO.”
Walmart declined to comment. Flipkart did not respond to queries sent by ET as of press time.
Early investors Tiger Global Management and Accel are expected to sell a majority of their stakes in a Walmart deal, while retaining some shares, said one of the sources. Tencent is also likely to stay back as an investor.
India’s online retail market is currently pegged at about $15-18 billion and is expected to hit $50-60 billion by 2020. But the online penetration of retail still remains low at just 2 per cent, creating an obvious opportunity.