One of the major e-commerce players, Flipkart is set to add another feather to its cap. Now it is vying for an international listing – preferably Nasdaq. There sure are many who are questioning Flipkart’s choice of getting listed in US rather than choosing the Indian counterparts like Nifty.
The reason for choosing an international listing is that, unlike in India, the investors in US are known to chase a ‘growth story’ over a profit story. With the traditional definition of a promoter and profit issues it is nearly impossible to get a listing in India. In case of Flipkart, since its inception in 2007, the company has raised around $ 3 billion and is at present valued at $ 12 billion. But it is yet to make profits and establish a business model which is profitable in both short and long run for its survival. This surely is a point which many market analysts keep pointing, since the time Flipkart expressed its intention of getting listed in stock market.
The scenario in India is that, for public issues of companies without a three-year ‘profitability’ record the Securities and Exchange Board of India (SEBI) has reduced the investor quota from 35% to 10% of the issue size. The logic behind such a provision is that SEBI aims at protecting the retail investors from Intial Public Offerings (IPO) from loss-making companies. The listing in US stock markets on the other hand is comparatively easy, and thus Nasdaq is an obvious choice for Flipkart. Apart from US, Flipkart is also looking for getting listed in Singapore because listing norms here too are not as strict as in many other countries.
Time and again, Nasdaq is has been defined as an “exclusive club”- one where companies with “solid history” and “top notch management” are considered. Thus it goes unsaid that Flipkart should build a leadership team with global resonance. Perhaps with this goal in mind, the company has been attracting the best talent in its leadership team with the appointment of Punit Soni (former Google Executive), S. Krishnamurthy (former McKinsey Director) and Sanjay Baweja (former Finance Chief at Tata Communications).
Following the footsteps of Chinese e-commerce giant Alibaba, earlier this year, Flipkart was in talks with investment banking firms like Morgan Stanley, Goldman Sachs, Deutsche Bank and Citigroup to help raise a minimum of $ 5 billion through an IPO listing in New York Stock Exchange (NYSE) which would value it at a whopping $30 billion.
Alibaba’s successful lisiting in NYSE is surely inspired many e-commerce companies and has opened up several possibilities for them to explore. This surely is a positive sign for growth and expansion of ecommerce businesses across the world in general and for Indian companies in particular.
Flipkart is one of India’s leading e-commerce stores. The first billion dollar company in Indian e-commerce, Flipkart offers more than 20 million products across 70+ categories. For the latest Flipkart offers and Flipkart discount codes, visit DiscountMantra – India’s best online coupons and offers store.