Walmart-owned Flipkart may sell its stake in Shadowfax Technologies for up to Rs 750 crore: Report

Walmart-backed e-commerce company Flipkart is preparing to sell part of its stake in logistics firm Shadowfax Technologies in a transaction worth between Rs 700 crore and Rs 750 crore, according to a Moneycontrol report.

The report said Flipkart could sell about 33.7 million shares after a six-month lock-in period expires at the end of July.

“Flipkart may sell shares as early as the end of this month … as part of a larger block deal,” one of the people told Moneycontrol.

The proposed transaction has not been formally announced, and its timing, size and price could change.

Holding could fall to 1.5%

Flipkart Internet Private Limited held 74,901,584 Shadowfax shares before the logistics company’s initial public offering, representing 14.83% of its fully diluted pre-offer equity, according to the final prospectus.

Flipkart sold 32,258,065 shares through the offer-for-sale portion of the IPO, receiving Rs 400 crore and reducing its holding to 42,643,519 shares. That represented 7.28% of Shadowfax’s fully diluted post-offer equity.

About 33.7 million of those shares are expected to become eligible for sale after the six-month restriction ends.

If the reported transaction is completed in full, Flipkart would retain 8,904,668 shares, equivalent to a 1.52% holding based on the post-IPO equity disclosed in the prospectus.

Those shares form part of Shadowfax’s minimum promoters’ contribution and are locked until 23 July 2027.

Although Flipkart contributed shares towards the requirement, the prospectus states that it is not a promoter of Shadowfax and did not acquire promoter status by doing so.

The proposed deal will be Flipkart’s second reduction of its holding in Shadowfax following the IPO sale.

Investment began in 2019

Flipkart first invested in Shadowfax in December 2019, when it led a $60 million financing round alongside existing investors.

Shadowfax operates e-commerce, D2C and hyperlocal delivery networks. Its prospectus lists Flipkart among its largest customers.

Shadowfax as one of Flipkart’s key last-mile delivery partners, particularly during periods of heavy demand when the retailer’s in-house logistics network is under pressure.

The report said other pre-IPO investors could also participate in the proposed block deal, although their involvement has not been formally confirmed.

Flipkart sells portfolio investments

The Shadowfax plan is the latest in a series of investment disposals by Flipkart.

Moneycontrol reported that exits involving companies including logistics platform BlackBuck and Aditya Birla Group businesses had generated more than Rs 2,500 crore for the retailer.

The report also said Flipkart had significantly reduced its monthly cash burn from about $40m a few months earlier, without providing an updated figure.

Flipkart has increasingly used portfolio sales to release capital while avoiding another external fundraising round and delaying plans for its own stock-market listing.