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No IPO for two years as Flipkart not ready for quarterly scrutiny

Digbijay Mishra & Itika Sharma Punit  |  Bengaluru 


Amid much buzz over its plans for an initial public offering (IPO), Bengaluru-based online retail major Flipkart does not plan to list on stock exchanges for at least two years as the company believes it is not prepared to face the "scrutiny" that a listed company is subjected to.

"We are still at a stage where we do not want to stand scrutiny on a quarterly basis. We would rather keep ourselves private for as long as we can and then we will see what lies ahead," Flipkart Chief Financial Officer Sanjay Baweja told Business Standard. "Our agenda today is that we need to plan for our next three years. We don't want to plan our business on a quarter-to-quarter basis. Although, yes, listed companies also plan for three to five years, a lot of their mind bandwidth goes on the quarterly performance because that gets published, questioned and applauded or punished by the market," he said.

Industry sources have in the past said the company is eying an international listing, with Nasdaq in the US emerging as the preferred destination over a 12-18 month timeframe.

While one of the major reasons being cited for the need to go for an IPO was to give the company's existing investors an exit route, Baweja said, the venture capital firms who have invested in Flipkart are in no rush to exit.

"There is a continuous dialogue with people who have invested in us and most of them are here for the long haul. I don't think they are restricted by our need to do an IPO. I think they are fine," Bajwa said. "This company is going to be very large and so the investors are willing to wait. They would need an exit strategy but they are willing and happy to wait."

Through the past few years, Flipkart, valued at about $12 billion, has often been in the news for raising funds. In 2014, it raised about $2 billion. Since its launch in 2007, the company has raised about $3 billion from a clutch of marquee investors. The company is yet to record profits.

The company's recent move to attract top talent from Silicon Valley has also been viewed by experts as a move to build a leadership team with global resonance, which would help the company if it looks at a listing in the US. According to online resource website Investopedia, Nasdaq is similar to an "exclusive club", one for which companies with "solid history" and "top-notch management" alone are considered.

Recently, Flipkart announced the appointment of former Google executive Punit Soni as chief product officer. It has also appointed former McKinsey director Saikiran Krishnamurthy as chief operating officer (COO) of its commerce platform. Baweja was also brought on board not too long ago from Tata Communications.

Baweja, however, said that the choice of stock exchange will be decided at the time when the company is ready to go public, and market conditions would play a vital role in the same.

"I would want myself as a company to be ready for an IPO, and then depending on the market conditions at that time, we will decide," he said. "Decision on a stock exchange is not a function of our choice alone, but also about how the markets are at the time when we plan to go to market. I would not want to put a finger on a stock exchange as of now."

While experts have said that Indian bourses may not be an option for internet companies such as Flipkart, Baweja highlighted that the Securities and Exchange Board of India is working on a new framework to facilitate such IPOs.

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First Published: Fri, May 08 2015. 00:57 IST