Flipkart is reportedly looking to list in US via a blank cheque firm

• Walmart-owned e-commerce giant Flipkart is exploring an initial public offering (IPO) in the US through a merger with a special purpose acquisition company (SPAC).
• SPAC companies are generally formed as “blank cheque” firms with the specific purpose to raise capital through a market debut to acquire another company.
• Indian renewable energy company ReNew Power had recently announced its merger with a similar SPAC, while according to reports grocery startup Grofers is exploring the same.

Walmart-owned e-commerce giant Flipkart is exploring an initial public offering (IPO) in the US through a merger with a special purpose acquisition company (SPAC), according to a report by Bloomberg.

The listing in the US markets could give the online retailer a $35 billion valuation. Flipkart’s last reported valuation was $24.9 billion, when it received funding from Walmart in July, 2020.

What is a SPAC?

SPAC companies are generally formed as “blank cheque” firms with the specific purpose to raise capital through a market debut to acquire another company.

When a deal is formed through SPAC, the companies have two years to complete the acquisition. If the deal fails to go through, the SPAC will have to return all money to the investors.

Through a SPAC deal, companies don’t have to go through the traditional paperwork hassles needed for an IPO.

The reason why a SPAC is better than an IPO is best described by Don Butler, managing director at venture capital fund Thomvest Ventures. “An IPO is basically a company looking for money, while a SPAC is money looking for a company,” he recently said.

There are many advantages of opting for a SPAC deal, first the company would get direct expertise from a company that has been in the business of taking firms to the public markets, and SPACS also acquires companies at a premium, giving more value to the initial investors in the company.

Flipkart isn’t alone

Flipkart, if the deal goes through, will join the long list of companies in the US that have successfully taken the SPAC route in the last year.

Even Indian companies -- like the renewable energy firm Renew Power -- have announced their merger with a blank cheque company for a listing in the US. In fact, Renew Power’s SPAC is being backed by the Sri Lankan-American investor Chamath Palihapitiya, who has played a major role in the SPAC boom in the US.


Softbank-backed grocery startup Grofers is aso looking for a listing in the US through a SPAC, as reports suggest.

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