Walmart-Flipkart deal: IT dept seeks sale agreement to assess tax liability

Softbank May Invest Whopping $3 Bn in Paytm Mall, Thanks To Flipkart

Earlier in April, Softbank had pumped in $400 million, while about $45 million came from Alibaba.

There are also reports that SoftBank was also in discussion with Walmart for deciding its role in Flipkart.

The reason for this potential flip-flop is being attributed to a hefty tax burden that a short-term exit from Flipkart will attract for Softbank.

Currently, both Amazon and Flipkart control a respective 35 percent of India's e-commerce market, which is estimated to be a $30 billion market today but poised to grow into a $200 billion market within the next 10 years. While it has pumped in close to $2 billion into Indian startups like Snapdeal, Ola and Housing.com in last few years, it has also written off a significant portion of that on account of loss in valuation. Here, it is worth mentioning that Flipkart is an Indian e-commerce giant.

When Walmart announced last week that it would buy a 77% stake in Flipkart, there was no question that it included Soft-Bank's 22.3%.

SoftBank Vision Fund invested about $2.5 billion in Flipkart in August previous year after a failed attempt to orchestrate a merger with Snapdeal, which was its first bet in the Indian online retail space in 2014.

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Post the Walmart-Flipkart, SoftBank reportedly had a second thought about selling its entire Flipkart stake to Walmart.

A Walmart spokesperson declined to comment on SoftBank's plans. "There are two-three other investors coming in but Walmart will always retain a clear majority", he said, adding that the Japanese giant had earlier agreed in writing to sell its stake and exit Flipkart altogether.

Sources said Walmart had indeed courted SoftBank for buying its shares but the Japanese group has not yet taken a final call on the issue.

However, there is an important clause that can prevent minority shareholders from forcing an IPO-if after four years, Walmart owns over 85% of Flipkart, minority shareholders of the latter will lose their veto rights on business decisions and transactions at Flipkart.

While the startup ecosystem is rejoicing at Walmart's $16 Bn boost to Flipkart, CEO Kalyan Krishnamurthy has his eyes firmly focused on ensuring that his team continues delivering to take on the competition. The report added that Walmart told the SEC in regulatory filings that the United States retail giant has an option to invest "an additional $3 Bn in Flipkart at the same valuation within a year of completing the acquisition of a 77% stake".

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