After Grofers, Flipkart To Explore SPAC Route For Public Listing In US

SUMMARY

The talks for a deal with a blank-check firm are at a very early stage and could fall apart as no plans have been finalised yet

Several Indian tech startups are exploring the SPAC route for a public listing, as it involves less regulatory scrutiny, along with more certainty over the valuation and funds that will be raised

A SPAC is a development stage company with a business plan centred around a merger or acquisition with another company

Walmart-owned ecommerce major Flipkart is reportedly exploring a public listing in the US, via a special purpose acquisition company (SPAC), also called a blank-check firm. Although, the company may decide to go with a traditional initial public offering (IPO).

According to ET, which first reported the development, the talks for a deal with a blank-check firm are at a very early stage and could fall apart as no plans have been finalised yet.

Several Indian tech startups are exploring the SPAC route for a public listing, as it involves less regulatory scrutiny, along with more certainty over the valuation and funds that will be raised.

A SPAC is a development stage company with a business plan centred around a merger or acquisition with another company.

Besides Flipkart, Droom, PolicyBazaar, Zomato, Delhivery and Grofers are also planning IPOs (initial public offerings) this year. Given that none of these startups are profitable, an overseas listing for most of them is a near certainty.

Last month, it was reported that Grofers is expected to raise $400-$500 Mn through a public listing on Nasdaq by merging with New York-based Cantor Fitzgerald’s blank-check firm.

The SPAC route would make sense for Grofers, as it would help the loss-making online grocery seller raise funds for the IPO, and possibly list in India later.

As for Flipkart, earlier this week, it was reported that the company was planning to acquire online travel portal Cleartrip a move that would pit the company against incumbents such as MakeMyTrip, Yatra, Ixigo, GoIbibo, Booking.com, EaseMyTrip and other aggregators in the travel and hospitality booking segment.

Flipkart, along with Amazon, will also be hit by proposed changes to India’s foreign direct investment (FDI) regulations for the ecommerce sector. According to reports, the new rules would not allow an ecommerce firm to hold an indirect stake in a seller through its parent company.

Meanwhile, for the fiscal year ended March 31, 2020, Flipkart India Pvt Ltd, reported a 12% growth in its revenue at INR 34,610 Cr, and at the same time cut its loss by 18% to INR 3,150 Cr.