Flipkart plans to raise $5 b via IPO in US

India’s capital market regulator may be gearing up to relax listing norms for new-age and technology-enabled start-ups on domestic exchanges, but this has certainly not forced a rethink in e-commerce poster boy Flipkart’s plans to tap Wall Street.

The Singapore-registered company, with operations only in the Indian market, is eyeing US bourses to raise around $5 billion through an initial public offering (IPO) over the next 12-18 months, said at least three investors aware of the development.

“Flipkart is already readying the papers and has signed up investment bankers for the IPO. They do not want to list in India as foreign private equity investors have the largest say in the company and, secondly, it is registered in Singapore.

“The US listing is likely to be the preferred route,” said a venture capital investor on condition of anonymity.

Earlier this week, SEBI had issued a white paper, where it proposed various measures to make domestic listing more attractive for start-ups and e-commerce companies. Flipkart declined to offer any comment for this story.

The company, founded by former Amazonians Sachin Bansal and Binny Bansal, has US-based Tiger Global as its largest investor followed by Russia’s DST Global. Since its inception in 2007, the company has raised over $2.5 billion and has a valuation of $12 billion at present.

But not everyone is convinced about the strategy to list overseas. According to Amit Tandon, founder of proxy advisory firm IIAS, “it is always better for companies to list in the market where they operate irrespective of where they are headquartered or registered. Overseas listing is a short-term play”.

Nearly 41 per cent of the stock market in the US comprises technology companies while the statistics for Indian bourses is a mere 13 per cent.

“With the ease in listing norms, we expect this number to double in the next five years,” said Sharad Sharma, spokesperson at iSpirt, the association of Indian software product companies. He added that technology firms are the “future” of capital markets as they would help in creating the maximum wealth.

In the last decade, the Indian start-ups ecosystem, mainly Internet-enabled businesses, has undergone a paradigm shift and witnessed the rise of over a dozen billion-dollar companies backed by global investors.

SEBI’s recent proposals have addressed key issues such as decreasing the lock-in period for promoter shareholders of start-ups to six months from three years.

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