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Walmart Making Billionaires: Flipkart Selling Its Stakes!

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The founders of one of the biggest online shopping store named Flipkart will sell their stakes in order to become billionaires in the competitive world. Both the founders, Binny Bansal and Sachin Bansal were employees in another shopping forum, Amazon.com Inc. They quit from there with an aim of starting their own e-commerce firm.

Walmart Making Billionaires: Flipkart Selling Its Stakes!

These two brilliant entrepreneurs have been bestowed with the title of billionaires due to their initiative of selling their stakes to the family that is estimated to be the wealthiest in the world. The Walton family, which controls Walmart Inc., led a group that bought a 77% stake in Flipkart Online Services Pvt. The Indian company was valued at a price of $21 billion. According to a Bloomberg analysis, both the founders owned 5% of the company’s annual return. While Sachin Bansal has decided to sell his entire stake to Walmart, Binny Bansal plans on selling part of his portion to the American retailer, Economic Times.

Even though the duo will be paid $1 billion for their stakes, the enjoyment of it might be short-lived. This is because, according to the tax experts, the pair may have to pay 20 percent capital gains tax on any shares they sell in the company. However, the partners may already have had enough revenue to be called billionaires before. The value of Flipkart was said to be held at $16 billion in 2015, giving each Bansal a $1 billion stake at the time, in lieu to the 7.5 percent they each held. But, they lost that status as the firm’s valuation subsequently dipped. According to researcher CB Insights, it was valued at about $12 billion last year.

Jeff Bezos, the richest person on the Bloomberg Billionaires Index was also intrigued by the deal that has been recently placed. In order to take a control over Flipkart, Amazon also provided a competing offer, however, the board finally chose to go with Walmart as they had a more regulatory approval.

Even then, recent updates suggest that Walmart had been having certain conflicting ideas about the deal. Walmart’s investors were bulging with queries about Flipkart’s recent losses and how long the company expects them to continue. Walmart still believes that the chance of losing the opportunity of extending their reach in a country that has a population of 1.3 billion cannot be ignored.

However, the idea of promotion and supply differs for both the companies. Flipkart believes in a discount favoring growth strategy, whereas takes costs out of its business and passes on the savings to customers. The contrary ethos of the two companies will be problematic and it remains to be observed as to how and where the different cultures meet.

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