InvestorQ : When is Flipkart proposing its IPO and what is this new SPAC route that Flipkart is considering?
Mahima Roy made post

When is Flipkart proposing its IPO and what is this new SPAC route that Flipkart is considering?

2 years ago

Flipkart, which is now majority owned by Wal-Mart, is planning to go public in the US markets. However, instead of going through the traditional IPO route, it may adopt the widely popular SPAC route. I will come back to this later, but the important fact is that a US listing promises a much better valuation to Flipkart, much larger quality of institutional participation and will be a natural extension of the Wal-Mart advantage.

However, the normal IPO process in the US is quite long-winding and Flipkart may adopt the preferred route these days which is the SPAC route. The idea of Special Purpose Acquisition Companies or SPACs is that of a company which is almost like a shell but which has raised money through an IPO in the US purely to acquire another company, and the target is normally mentioned. Then the other company merges into the SPAC to get listed.

This method is quite popular as listing through a merger with a US SPAC company will help to quicken its listing process. While a US IPO and listing was on the cards, Flipkart is also mulling the SPAC option closely since it saves time. According to early market estimates, Flipkart could seek a valuation of close to $35 billion or more in a blank-check transaction, where the SPAC will do an IPO for this purpose and then take over Flipkart.

If that happens, Flipkart could join the list of other companies like ReNew Power and even Grofers who are looking at a blank check transaction to list their companies in the US via the hugely popular SPAC route. It is estimated that as many as 10 Indian companies could go public through such blank check deals in the US as it saves them the hassles of the typical US listing requirements.