Softbank May Invest Whopping $3 Bn in Paytm Mall, Thanks To Flipkart

The $16 Flipkart Walmart deal was struck on 9 May

On Friday, Walmart had said in a regulatory filing in the U.S. that Flipkart's board or its minority shareholders could force the company to go for an initial share sale four years after the deal closes. "Walmart should not have any issue with that".

Singapore-registered Flipkart Pvt Ltd holds majority stake in Flipkart India.

On Wednesday, all significant shareholders in Flipkart like Naspers, venture fund Accel Partners and eBay had confirmed they were selling their shares to Walmart. Barely days after Walmart announced its plan to buy Flipkart, online marketplace eBay said it will end its strategic partnership with the latter and relaunch eBay India with a differentiated offer to focus on cross-border trade.

Since then Softbank held talks to invest $3 billion in the firm, the report added.

The department now is going through the Section 9 (1) of the Income Tax law, which deals with indirect transfer provisions, to see if the benefits under the bilateral tax treaties with countries like Singapore and Mauritius, could be available for foreign investors selling stakes to Walmart.

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SoftBank will get around $4 billion if it sells its entire 21 per cent stake in Flipkart.

When Walmart announced last week that it would buy a 77% stake in Flipkart, there was no question that it included Soft-Bank's 22.3%. SoftBank had alone pumped in over $5 billion in four companies including Paytm, Oyo, Flipkart, and Ola.

On May 12, Tamil Nadu Vanigar Sangankalin Peramaippu, a federation of traders in Tamil Nadu, warned the government of massive country-wide protests if the deal between Walmart-Flipkart was approved.

The Japanese company had invested about $900 million in Snapdeal in a hope that the home grown e-tailer would be able to challenge Flipkart's market leadership, but saw the company slip to a distant third behind Amazon India by 2016.

"So if SoftBank says something that Walmart doesn't agree with, there still have to be discussions". "Walmart may appoint or replace the chief executive officer and other principal executives of the Flipkart group of companies, subject to certain consultation rights of the board and the founder", the SEC filing said. The report added that Walmart told the SEC in regulatory filings that the U.S. retail giant has an option to invest "an additional $3 Bn in Flipkart at the same valuation within a year of completing the acquisition of a 77% stake". Post this round, SoftBank is slated to have a controlling stake.

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