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Flipback Tax: Razorpay restructures to cut levy; Groww pegs tax outgo at $70 million

Economic TimesEconomic Times · 1y ago
Flipback Tax: Razorpay restructures to cut levy; Groww pegs tax outgo at $70 million
Medial

Indian startups that were originally domiciled abroad are now making moves to shift their registered entities to India. Razorpay, a digital payments firm valued at $7.5 billion, has initiated a restructuring process to bring all of its India units under a single local holding company. This move is expected to reduce the company's tax outgo. Similarly, online stockbroker Groww has completed its domicile shift to India, accounting for around $60-70 million in taxes. Other startups, such as quick-commerce firm Zepto, are also planning to shift their domiciles to India. This trend is driven by the desire to align with regulatory frameworks and potentially prepare for IPOs in India.

Flipkart targets to shift domicile from Singapore to India

EntrackrEntrackr · 1y ago
Flipkart targets to shift domicile from Singapore to India
Medial

E-commerce major Flipkart is planning to shift its domicile or holding company from Singapore to India, according to a media report. With this, it will join several late stage companies which are also planning to move back to India over the next few months. The domicile shift can be linked to Flipkart’s plan to go for an initial public offering (IPO) in the near future, ET reports. Walmart-controlled Flipkart will be the second firm from the group which is planning to shift the domicile. Earlier, PhonePe became the first to do a reverse flip. It’s worth highlighting that PhonePe was fully separated from Flipkart Group in December 2022. PhonePe’s investors had to pay Rs 8,000 crore in taxes to the government for the move and Flipkart is also expected to pay heavy taxes in the process. The quantum of the tax to move domicile depends on the company’s valuation and third-party audits. Flipkart was last valued at $33 billion after a $600 million funding from existing backers in December last year. Also, it’s the most valued Indian-origin private company till now. In July 2021, Flipkart received $3.6 billion led by SoftBank at a valuation of $37.6 billion. The company was revalued at $33 billion after separation from PhonePe. Entrackr has reached out to Flipkart for comments. Walmart owns nearly 85% stake in Flipkart followed by Tencent and CPP Investment which own 7.1% and 2.3% shares, respectively. The company’s co-founder Binny Bansal officially exited the company in January this year. Most recently, fintech unicorn Groww announced moving back its base to India from the US. The firm already completed the process in March this year. Besides the above-mentioned three companies, KreditBee, Pine Labs, Razorpay, Meesho, Eruditus and Zepto have been working on reverse flips.

At $5 billion, startup’s exit street buzzier in 2024

Economic TimesEconomic Times · 7m ago
At $5 billion, startup’s exit street buzzier in 2024
Medial

Investors in Indian startups made more than $5 billion in exits in 2024, primarily through secondary transactions like IPOs and block deals. This trend is expected to continue in 2025, with the number of new-age IPOs likely to double. Secondary transactions have become a popular way for investors to generate liquidity while attracting new investors. Startups like Swiggy and FirstCry have seen significant exits through IPOs and block deals. The focus on smaller IPOs is expected to provide more investment options and release liquidity for existing investors. New venture capital firms are also emerging with a focus on secondary investments. Companies like Bluestone, Ather Energy, and Ecom Express are planning IPOs in the coming year. Overall, funding in Indian startups has seen a revival in 2024, but only a few select assets are drawing investor attention.

KreditBee plans ‘Ghar Wapsi’ from Singapore to India

EntrackrEntrackr · 1y ago
KreditBee plans ‘Ghar Wapsi’ from Singapore to India
Medial

Fintech company KreditBee is shifting its domicile to India from Singapore, sources aware of the development told Entrackr. With this move, the firm will join a bunch of fintech companies which are in the process of shifting their base to India from Singapore or the US (mostly Delaware). “Fintech companies including KreditBee want to be headquartered in India because the local ecosystem including public markets have matured in the past few years,” said one of the sources requesting anonymity. “Moreover, regulators tend to like fintech firms to be based out of the country as diligence and monitoring becomes easy.” KreditBee is registered as Finnove Private Limited in Singapore which has an over 70% holding in the Indian entity of the lending firm. According to sources, KreditBee has been working on a relocation plan for the past few months. “It’s seeking regulators’ inputs and figuring out tax liabilities,” said another source who also wished not to be named. Sources further added that another benefit such companies moving back to India hope to reap is from the rising valuations being offered by domestic public markets to technology firms. KreditBee has declined to comment on the story. Besides KreditBee, Pine Labs, Groww, Razorpay, Meesho and Zepto have been working on reverse flips. Walmart-owned PhonePe was the first to move its domicile to India and its investors paid a hefty Rs 8,000 crore in taxes to the government for this move. The quantum of the tax depends on the company’s valuation and third-party audits. KreditBee was valued at around $700 million during its latest tranche in March. It’s one of the few fintech companies that may turn unicorn in the next funding round. It has raised more than $400 million to date. Sources emphasized that a reverse flip will also smoothen KreditBee’s road to IPO. While the company isn’t in a rush, its founder and CEO Madhusudan Ekambaram anticipates a public listing by 2027. Six-year-old KreditBee facilitates loans up to Rs 4 lakh for a tenure of 2 to 15 months with an interest rate of up to 2.49%. As per the startup data intelligence platform TheKredible, Premji Invest is the largest external stakeholder with 23.44% followed by Newquest Asia and Alpine Capital. KreditBee posted Rs 64.33 crore profit whereas its revenue from operations grew to Rs 788.66 crore in FY23. Even in the first half of FY24, the company claimed a profit after tax of Rs 95 crore and expected to close the last fiscal with Rs 250-260 crore profit. The company majorly competes with MoneyTap, Fibe (formerly EarlySalary), LazyPay, and Sachin Bansal’s Navi, among others. A return to India, while driven by policy and market compulsions, will not be as simple as it sounds, thanks to the heavy bill it comes with for back taxes effectively. That might necessitate funding support for KreditBee, dispute being profitable, creating its own issues of valuations and change in stake. Going for a debt raise might also be a touch and go affair, considering the relatively higher interest rates now. Thus, figuring out the financials of the move will probably occupy a lot of mindspace for the firm now that it has decided to move. Investors will do well to hope and support any process that ensures a quicker resolution, to ensure the firm stays focused on its core business as well.

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