Japan’s SoftBank has not yet decided to sell its 20-22 percent stake in Indian e-commerce company Flipkart to US retailer Walmart, PTI reported.
SoftBank is yet to take a decision on exiting Flipkart because the Japanese company will be forced to pay huge tax on profits it would earn from share sale in India.
SoftBank’s investment of $2.5 billion in Flipkart will be valued at nearly $4.5 billion. The $2 billion profit would be taxed as per Indian law.
Since the profit is made from shares that were held for more than two years, it would attract a long-term capital gains tax of 20 percent plus surcharge and education cess, effectively wiping away a fourth of the profit.
Other deciding factors would be Masayoshi Son’s relationship with Walmart. SoftBank likes to be a long-term investor in India. The Japanese conglomerate is bullish on India and sees opportunities for growth of investment.
SoftBank’s Masayoshi Son will take a call in the next 7-10 days, on whether the group will exit India’s biggest online retailer or stay invested for some more time.
Walmart announced that it will pay about $16 billion to buy 77 percent stake in Flipkart.
Walmart said Flipkart co-founder Binny Bansal, Tencent Holdings, Tiger Global Management and Microsoft would hold the remaining 23 percent.
Naspers, venture fund Accel Partners and eBay confirmed they were selling their shares to Walmart.
South African internet and entertainment firm Naspers, which invested $616 million in Flipkart in August 2012, sold its 11.18 percent stake to Walmart for $2.2 billion. eBay is selling its stake in Flipkart for $1.1 billion.
