Saturday, 2024 April 13

Flipkart deliberates a SPAC merger to go public

As multiple late-stage companies in India and the US are exploring to list on stock exchanges via a shell company or SPAC (Special Purpose Acquisition Company), Flipkart seems to be following their footsteps as it looks to go public this year.

The e-commerce giant, which was acquired by American retail titan Walmart in 2018 for USD 16 billion, is now mulling to merge with a SPAC to fast pace its listing process in the US, a report by Bloomberg said, citing sources.

Flipkart’s advisers have approached several SPACs, the report said, adding that the Bengaluru-based retailer might be seeking a valuation of minimum USD 35 billion during the SPAC merger. Although these discussions are at a very early stage, the report added.

Also known as blank check companies, SPACs are shell companies that are formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing private company. After the acquisition, a SPAC is usually listed on one of the major stock exchanges. For private companies, SPAC is an easier and cheaper alternate route to raise funds, as compared to the traditional IPO process, which is cumbersome, expensive, and time-consuming.

Although SPACs have existed for decades, it was last year that they became increasingly popular. According to a Reuters report, based on data collated by Dealogic, US-listed SPACs have raised a record USD 82 billion through IPOs last year, while more than 120 SPACs have raised USD 36.19 billion by mid-February 2021.

Towards the end of last year, SPACs gained attention in Southeast Asia as well, with Indonesian unicorns like Tokopedia and Traveloka considering it as a possible option to go public. It seems that this trend may also catch up in India.

Citing Utpal Oza, head of investment banking for India at Nomura Holdings Inc, Bloomberg said as many as 10 Indian companies could go public through SPAC deals before the end of the year.

A week back, it was reported that SoftBank-backed e-grocer Grofers is deliberating a merger with a blank check company for listing its shares. Another Indian firm ReNew Power, which is one of the largest renewable energy producers, recently announced its merger with a Nasdaq-listed SPAC called RMG Acquisition Corp. II.

Moulishree Srivastava
Moulishree Srivastava
In-depth, analytical and explainer stories and interviews on technology, internet economy, investments, climate tech and sustainability. Coverage of business strategies, trends in startup and VC ecosystems and cross-border stories capturing the influence of SEA, China and Japan on the local startup industry.

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