E-commerce major Flipkart is looking to raise at least $1 billion dollars and is in preliminary talks with several investors, according to a report in the Economic Times (ET). This comes ahead of its proposed initial public offering (IPO) in the United States around Q4 of this year.
Sources told ET that the fundraising could go up to $2 billion and is principally aimed at expansion, kickstarting valuation ahead of the IPO, and competing better with rivals like Amazon and Reliance Retail.
The new investor pool includes sovereign wealth funds, private equity funds, pension funds, long-term passive funds and technology-focused financial groups. While the Flipkart fundraising is being primarily targeted at new investors, existing investors like Qatar Investment Authority, GIC of Singapore are also in the fray, the report adds.
An executive involved in the process told ET that the price discovery process is still ongoing and the US listing plans are also concurrently ongoing with SPAC (special purpose acquisition company) as a backup option. SPACs are blank cheque firms that entail a business plan focussed on acquisition or merger with another company.
JP Morgan and Goldman Sachs have been chosen as advisors in the fundraise.
Flipkart is expected to be valued at $28-30 billion in this round. The company had raised $1.2 billion in an equity round led by Walmart in July 2020, which valued the company at $24.9 billion. Existing investors, Qatar Investment Authority and China’s Tencent, invested a combined $79.1 million into the company in that round.
In 2018, Walmart had acquired 77% of Flipkart for nearly $16 billion at a valuation of $21 billion. At the time of the acquisition, the US retail giant had invested around $2 billion in primary capital, with the balance being utilised to buy out shares of existing investors.