As the Flipkart-Walmart deal is about to get sealed, the common investor in the two companies is finding ways to save hefty tax liabilities. Softbank Group is considering ways to sell its stake without attracting heavy taxes.
Flipkart Pvt Ltd, although operates and runs its business in India, it is a Singapore-registered company. SoftBank, the largest investor in Flipkart holds 20-21% of stake in the e-commerce firm. SoftBank is yet to decide how much of its 20-21% holding it will sell and when. Insiders believe that SoftBank may retailof its stakes for at least one or more years to avoid paying heavy taxes.
According to the anonymous sources, SoftBank is consulting with tax experts to decide its stake sale. The investment firm became the largest shareholder in Flipkart when it agreed to invest more than $2.5 billion in August 2017. In fact, SoftBank was reportedly pushing other investors to wait for a rival offer Amazon.
Last week, SoftBank decided to sellits shares to Walmart asother Flipkart investors including Tiger Global, Accel Partners, Naspers were firm about selling their individual shares to Walmart. The US-based retail giant is expected to pick up at least 55% of Flipkart stake at a valuation of $20-21 billion.
The existing Flipkart investors might sell off their entire stakes through a few prominent investors. While some of the earliest Flipkart backers, Tiger Global Management may end up retaining a small stake. Even Tencent and Naspers may retain a small number of stakes.
While there were rumors about Flipkart cofounder’s role in the new organization run by Walmart, the company has clarified its views. Walmart wants Flipkart co-founder Binny Bansal and CEO Kalyan Krishnamurthy to continue their roles post the acquisition. According to Mint’s report on May 2nd, Flipkart co-founder, and executive chairman, Sachin Bansal is yet to make a decision on his future role.