Flipkart sells front end business to former OnMobile COO & others to comply with FDI norms
To comply with the foreign direct investment norms in the country, #flipkart has sold its front end operations to a group of investors led by former OnMobile Chief Operating Officer Rajiv Kuchhal.
Kuchhal and two other investors now control the Bangalore based WS Retail, which manages Flipkart’s operations in India (source).
Flipkart incorporated a new parent company in Singapore which owns the back end to which all foreign investments are being made while the front end has a licencing agreement with the Singapore company to use technology and the Flipkart brand to do business in India (note that the report hasn’t been confirmed by Flipkart or Rajiv Kuchhal).
Last year, Flipkart, raised $150 million from South Africa’s media group Naspers and Existing investor Tiger global at a valuation of nearlly $850 million.
Flipkart & FDI
Four months ago, the Indian government had allowed up to 51 % Foreign Direct Investment in multi brand retail. At the time, it seemed like multinational giants like Amazon and Walmart would soon set shop in India. However, the government said that e-commerce companies with FDI are not permissible in India.
This was followed by an enforcement directorate probe on Flipkart and others, for having flouted FDI norms. In December 2012, the government had ordered enforcement directorate to investigate Flipkart for alleged violation of norms laid down by the government pertaining to foreign direct investment in multi brand retail.
What’s NextBigWhat for Flipkart? The launch of Flipkart Marketplace.http://www.nextbigwhat.com/flipkart-ws-retail-divestment-sold-to-onmobile-coo-297/flipkart