The world's largest e-commerce player backed by billionaire Jeff Bezos, Amazon Inc., is likely looking to debut on Indian stock exchanges, as per reports. Amazon has reportedly started discussions with top bankers. Through the IPO, Amazon is reportedly planning to spin off its Indian business. This comes after Flipkart who is also planning to go public in the next 12-15 months. Flipkart currently dominates the Indian e-commerce market.
Amazon IPO:
As per YourStory report, sources said that Amazon has begun discussions with bankers for an IPO listing on BSE and NSE, in a move to spin off its India entity. The major reason behind the listing is data localisation and the opportunity to have its inventory in India.
The report revealed that Amazon's management held a call meeting with 8-10 investment banks last week. Officials from India and the US were present during the discussion. Also, Amazon reportedly discussed a plan with JP Morgan, who is its banker on Wall Street.
In India, the laws allow only domestic companies to adopt inventory model in the e-commerce sector.
The inventory-based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by an e-commerce entity and is sold to the consumers directly, as per the Commerce & Industry Ministry.
Spinning off and listing in India could pave the way for Amazon to attract more domestic shareholders, while aiming to transition to inventory model, as per the report.
When YourStory reached out to Amazon on the development, the e-commerce giant's spokesperson said, they do not comment on "rumours and speculations." GoodReturns.In could not confirm the same!
While Amazon is the largest e-commerce player in the world, it faces intense competition from Flipkart.
Last year, data from AllianceBernstein revealed that Flipkart holds the largest market share of 48% in the Indian e-commerce industry. However, what was surprising was that Bangalore-based Meesho was the fastest-growing e-commerce platform. As per the data, Flipkart's user base surged 21% YoY in 2024, while Meesho registered a whopping 32% growth and Amazon lagged with just 13% growth.
Amazon has lost market share against Flipkart and Meesho. the SoftBank-backed Meesho has gained in popularity due to its affordable prices and deep discounts on goods and products. Meesho also recently bagged $500 million of funding.
Apart from this, Amazon could not beat Flipkart in the quick commerce segment, competing against Zepto, Swiggy-backed InstaMart and Eternal-backed Blinkit. All three delivery apps are offering more than just groceries, from appliances, clothing to cafe shops as well.
Amazon has begun its pilot service in India, as per the report, while Flipkart Minutes are currently accessible in metro hubs like Bengaluru, Mumbai and Delhi, where customers can buy groceries, household essentials, mobile & electronics, personal care, fruit & vegetables and get them delivered at rapid speed.
Although the timeline and size of the IPO by Amazon is yet to be known, its rival Flipkart is reportedly looking to list in India over the next 12-18 months.
Key IPO eligibility criteria include as per Ventura Securities are:
- Net tangible assets: The company must have net tangible assets worth at least ₹3 crores in each of the last three years.
- Operating profit: The company must have recorded an average operating profit of at least ₹15 crores in any of the three years out of the last five years.
- Net worth: The company's net worth should be positive in at least two out of three fiscal years.
- Issue size: The IPO issue size should not exceed five times the company's pre-issue net worth.
What should companies consider for forthcoming IPOs as per Ventura Securities:
For companies planning a forthcoming IPO, careful preparation is key. Here are some important considerations:
Timing: Market conditions can significantly impact the success of an IPO. Companies should time their IPO to coincide with favourable market conditions.
Valuation: The company's valuation is crucial. Overvaluing or undervaluing the IPO can affect long-term stock performance.
Transparency: Maintaining transparency with potential investors is essential. Full disclosure of financials and risks builds investor confidence.
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