In the start-up world, it is an investor's dream to go public - create a successful (and profitable) company, and list it on a stock exchange.
Here’s how the ideal journey of a start-up looks like:
Flipkart, the company that brought the start-up culture from Silicon Valley to India - may get listed in Singapore (where it's registered) or in the US (where Walmart, it's parent company is registered) in 2021.
But, why list overseas? Why not in India?
Possible reasons include:
1. Getting listed overseas gives the brand a global aura.
2. Easier access to a larger pool of capital, and a wider reach to all types of investors. Indian investors may not have an appetite for riskier start-ups, or may not invest in the IPO of a company that has just turned profitable.
3. An overseas listing may fetch better valuations. Flipkart is expected to be listed at a valuation of $50Bn.
In 2016, Walmart acquired a 77% stake in Flipkart, making it the largest foreign investment in our country. In July 2020, it raised another $1.2B from Walmart, valuing it at $24.9B. The listing could very well give Walmart a 2X return.
Someone’s going home happy!
Flipkart’s listing may also open doors for other start-ups to list overseas. As you read, the government is drafting overseas listing guidelines (it is not legal yet).
So, will Flipkart now compete with Amazon globally? What does the future hold for Flipkart? And is it fair for Indian companies to list overseas?
Only time will tell.
Till then,
ReadOn.
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