From marketplace to market: Flipkart gears up for Nasdaq listing in 2018

E-commerce marketplace Flipkart has hired one of the Big Four audit firms to prepare for its initial public offering (IPO) on the Nasdaq.

The consultant had begun due-diligence, which would last 18-24 months, people familiar with the development said. A Flipkart spokesperson declined to comment.

Flipkart co-founder Binny Bansal, who was elevated as group chief executive officer (CEO) on Monday, said in a mail to employees that one of his key tasks was to see the IPO through. Bansal was replaced as CEO by Kalyan Krishnamurthy, an aide of Lee Fixel, founder of Tiger Global, the largest investor in Flipkart.

The move is seen as Fixel's effort to cash his investment in Flipkart, first made in 2010. This will also provide an exit to other investors such as Accel Partners, DST Global and GIC.

Flipkart is yet to post a profit, despite a revenue of Rs 15,000 crore in 2015-16, and does not qualify for an IPO in India because of the Securities and Exchange Board of India’s requirement of a minimum Rs 15 crore average pre-tax operating profit in at least three of the five preceding years.

“For more than a quarter, the company has been working on meeting requirements of a Nasdaq listing. An IPO is possible in the next 12-18 months,” said a Flipkart executive.

“As Flipkart moves towards a monetisation strategy in a stock exchange, there is a need for a professional CEO, who is seen in a better light by retail and institutional investors,” said Amarjeet Singh, partner, tax, KPMG in India.

In 2015, Flipkart was working on an international listing, however, the company’s co-founder and current chairman Sachin Bansal said in April 2016 Flipkart would not go public soon. “We will take a call at the right time. At present, we do not need to,” he said.

Experts said Tiger Global was trying to create build Flipkart’s image after a series of markdowns by key investors like Morgan Stanley, a management exodus and intense competition from Amazon. “Tiger Global, the biggest investor in the company, is trying for a listing before perception clouds judgement,” said an analyst.

According to data platform Tofler, Flipkart India and Flipkart Internet together earned Rs 15,129 crore ($2.2 billion) in 2015-16, up from Rs 10,390 crore in 2014-15. Their losses mounted to Rs 2,850 crore from Rs 2,000 crore a year ago. Flipkart India is the wholesale cash-and-carry company, while Flipkart Internet is an e-commerce marketplace that books commissions on each sale.

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5. Infosys Limited