Flipkart to sell part stake in Shadowfax for ₹700cr
What's the story
Walmart-backed e-commerce giant Flipkart is planning to sell a part of its stake in logistics start-up Shadowfax Technologies, according to Moneycontrol. The deal, which is likely to be worth between ₹700 crore and ₹750 crore, will be executed as part of a larger block deal. The transaction is expected to take place at the end of this month when the six-month lock-in period expires.
Dilution details
Second stake dilution in Shadowfax
This will be Flipkart's second stake dilution in Shadowfax and comes as part of a string of monetization moves that have already brought over ₹2,500 crore (approximately $265 million) to the Walmart-owned e-commerce giant. The company has been focusing on portfolio exits to free up liquidity while avoiding external fundraising and postponing its IPO plans.
Stake sale
Flipkart's investment journey with Shadowfax
Flipkart first invested in Shadowfax in 2019 and has supported the logistics start-up through several funding rounds. Currently, Shadowfax is one of Flipkart's main last-mile delivery partners, especially during peak times when its own logistics network is stretched. According to an updated draft red herring prospectus filed with the capital markets regulator ahead of its public market listing, Flipkart held about 14% in the company, though following the IPO's offer-for-sale component, its stake was reduced to approximately 8%.
Stake reduction
Flipkart's stake post-IPO
Post-IPO, Bengaluru-based Flipkart sold some shares through the offer-for-sale (OFS) route, reducing its stake in Shadowfax to around 8% (approximately 42.6 million shares). By diluting some of its stake at the time of IPO, Flipkart had already made around ₹400 crore. Now, the e-commerce giant stands to gain further by betting on Shadowfax as it plans to sell around 33.7 million shares or dilute its stake by about 6%.
Promoter contribution
Regulatory restrictions on Flipkart's remaining shares
Flipkart will have to hold on to the remaining 8.9 million shares in Shadowfax as part of its minimum promoter contribution. These shares are locked in for a mandatory period of 18 months, during which they cannot be sold. If promoters themselves do not have enough shares to meet the requirement, eligible existing shareholders can contribute part of their holding without becoming promoters.