InvestorQ : What exactly are these SPAC structures that are now being spoken about. Is Flipkart likely to do a US listing through the SPAC route?
diksha shah made post

What exactly are these SPAC structures that are now being spoken about. Is Flipkart likely to do a US listing through the SPAC route?

Answer
image
Niti Shenoi answered.
1 month ago
Follow

In the last few weeks, there has been a lot of talk about the SPAC structures especially after companies like Flipkart and ReNew Power have indicated that they may prefer the SPAC route to listing in the US. It could be a big trend for India and for Indian companies because it must be remembered that in the last 3 months, the US markets have seen SPAC structures raising more than $80 billion in 2021 in the US markets in lieu of traditional IPO markets.

Let me first talk about what is a SPAC? Special Purpose Acquisition Companies or SPACs are shell companies that are specifically floated to merge or acquire a target company that wants to use this SPAC as an instrument for listing. It must be remembered that the SPAC does not have any other business of its own other than buying out the target company.

Normally, the SPAC obtains special consent from the stake holders of the SPAC, which could be institutions and individuals. Target company looking for a simpler form of listing other than IPO get a hassle-free route to list in advanced markets like the US where listing norms are normally stringent. SPAC allows listing without the listing formalities of a regular IPO.

Let me now address the second part of your query on Flipkart IPO proposed. As of now, there is no official confirmation and it has only been unofficially reported that Flipkart may look at the SPAC as one of the possible routes to list in the US. For Flipkart, a regular IPO in the US will take time and Indian markets may not have appetite for a $35 billion stock.

IT is well known that Flipkart is backed by its majority shareholder, Wal-Mart. Hence, for them getting a SPAC to buy them out and help in listing may not be too difficult. Apart from Flipkart, ReNew Power and Grofers are also closely looking at the SPAC route to get their shares listed on global stock exchanges. We will have to wait for more confirmation.

0 Views