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Report: Walmart India Unit Flipkart to Launch IPO

By Eric Volkman – Sep 17, 2020 at 6:24PM

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This would take place overseas, likely in either Singapore or the U.S.

Flipkart, the prominent e-tailer based in India that is owned by Walmart (WMT -0.35%), is preparing for an initial public offering (IPO). That's according to an article published Wednesday by Reuters, citing "sources familiar with [Flipkart's] plans."

Such a flotation could value Flipkart at $45 billion to $50 billion, say those sources. Apparently the company is considering a listing in either Singapore or the U.S. The former might be easier, as the business is incorporated in the small nation. On the other hand, listing on an American exchange would drop the company into a much wider, and wealthier, pool of investors.

Walmart store signage at night.

Image source: Walmart.

At the moment, Indian regulators are drafting new rules that could allow domestic companies to directly list on foreign stock exchanges.

It was unclear how far along Flipkart is in its quest for an IPO. So far, preparation for a potential listing has occurred mostly internally, according to the some of the article's sources; the company is considering hiring advisors for the project. Other sources claim that Flipkart is already bringing its operations in line with standards mandated by major regulators.

If Flipkart were to launch an IPO that brought in the desired proceeds, Walmart would stand to gain a windfall. It paid only $16 billion for a 77% stake in the company in 2018. That deal was the largest single foreign direct investment into a business in the massive nation, a record it still holds.

Investors seem to like the idea of Walmart's big Indian asset rising precipitously in value. On Thursday, they bid up Walmart's stock by 0.3%, contrasting notably with the pronounced declines of the top equity indexes on the day.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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