New Delhi, May 12: US retail giant Walmart Inc may come up with an initial public offer (IPO) of Flipkart, in which it is buying roughly 77 per cent stake, in as early as four years. Last week, Walmart Inc announced the acquisition of 77 per cent stake in Flipkart for about USD 16 billion (Rs 1.05 lakh crore) in the largest e-commerce deal which will give the US retailer access to the Indian online market that is estimated to grow to USD 200 billion within a decade.
"Pursuant to a Registration Rights Agreement to be entered into concurrently with the shareholders agreement, holders of 60 per cent of the Flipkart shares held by the minority shareholders, acting together, may require Flipkart to effect an initial public offering following the fourth anniversary of closing of the transactions," Walmart Inc said in a regulatory filing with the US Securities and Exchange Commission.
Walmart said the IPO will be at "a valuation no less than that paid by Walmart under the share issuance agreement, subject to the satisfaction of certain other conditions regarding such offering (the IPO)".
"Shareholders agreement would expire upon the consummation of the IPO, whether initiated by the board or the minority stockholders," it added.
Flipkart's minority shareholders after the deal include co-founder Binny Bansal, China's Tencent Holdings, US hedge fund Tiger Global Management and Microsoft Corp.
Meanwhile, sources with direct knowledge of the development said that Japan's SoftBank has not yet decided to sell its 20-22 per cent stake in Flipkart to Walmart.
SoftBank's Masayoshi Son will take a call in the next 7-10 days on whether to exit India's biggest online retailer or say invested for some more time, they said.
The factors that hold key to the decision include the tax SoftBank has to pay on profits it would earn from stake sale. In case SoftBank decides not to sell, Walmart would be left with about 55 per cent of Flipkart.
Last week, all significant shareholders in Flipkart like Naspers, venture fund Accel Partners and eBay had confirmed they were selling their shares to Walmart.
Elaborating on the deal, Walmart Inc said the Flipkart board will initially have eight directors: five Walmart-appointed, two appointed by certain minority shareholders and one founder.
Walmart said the number of directors may be increased to nine at any time.
The US retail major said it may appoint or replace the chief executive and other principal executives of the Flipkart group of companies, subject to certain consultation rights of the board and the founder.
It said among other transfer restrictions and subject to certain exceptions, transfers of Flipkart shares will be subject to a right of first refusal exercisable by Walmart and other significant minority shareholders, and in certain situations, co-sale rights. The right of first refusal for the minority shareholders will expire if Walmart owns 85 per cent of the outstanding shares of Flipkart, it added.