American retail behemoth Walmart is expected to invest United States dollars 3 billion (about Rs 20,000 crore) more in homegrown online retail giant Flipkart within a year of completing the acquisition of 77 per cent stake in the Bengaluru-based e-commerce major, reports the Times of India citing the company's filing to the US Securities and Exchange Commission (SEC).
The filing also said the IPO would be done at no less a valuation than the deal price for the e-commerce firm.
Flipkart's minority shareholders after the deal include co-founder Binny Bansal, China's Tencent Holdings, US hedge fund Tiger Global Management and Microsoft Corp. The Flipkart share purchase deal is likely to close by 9 March 2019.
The Shareholders Agreement would expire upon the consummation of the IPO, whether initiated by the Board or the Minority Stockholders.
According to the filing, Walmart or its units could ask Flipkart to issue new ordinary shares of up to $3 billion before the close of the "transactions and on or before the first anniversary of the closing". Walmart, however, did not disclose the per share price of Flipkart at which it is buying its shares.
Walmart Inc., the world's largest retailer, could be forced to publicly list its newly acquired Indian e-commerce company, Flipkart Group, within four years at the request of a small minority of Flipkart shareholders, a public filing shows.
In a filing with the Securities and Exchange Commission of the United States, the $500-billion Bentonville, Arkansas-based retailing giant lifted the veil of secrecy ever so slightly on the deal that it has negotiated with the Sachin and Binny Bansal, the unrelated co-founders of Flipkart, and other existing shareholders of the Bangalore-headquartered group that comprises five companies based in India and four in Singapore.
As per SEC filing, Walmart may take Flipkart public in four years.
The company's stake in Flipkart could fall below 77 percent well before a potential IPO, Walmart said, requiring a greater share of other investors to agree to a public listing. No termination fee would be payable by any party if the Share Issuance Agreement or the Share Purchase Agreement were terminated.
The Flipkart board will initially have 8 directors, as per the filing.
Walmart noted that the board may be increased to nine directors at any time, with the additional director being appointed by Walmart with the majority approval of Flipkart directors and unaffiliated with Walmart.
"In addition, holders of 60 per cent of the Flipkart shares held by the minority shareholders, acting together, may exercise veto rights to prevent certain significant transactions or other events involving Flipkart", it added.
In certain situations, Walmart and a percentage of Minority Shareholders may exercise a "drag along" right to cause the remaining Minority Shareholders to sell all or a portion of their shares in a sale of Flipkart.
The Economic Times newspaper reported on Friday, citing unnamed sources, that Japan's SoftBank Group, which owns a roughly 20 percent stake in Flipkart, was rethinking its exit due to tax liabilities and because it saw further value in Flipkart.