1. From flip to flop? Flipkart valuation marked down to under $10 bn

From flip to flop? Flipkart valuation marked down to under $10 bn

Following yet another markdown by investors, e-retailer Flipkart’s valuation has dropped to a shade below $9 billion, much lower than the peak valuation of $15 billion in June 2015, when the e-commerce player raised $700 million in a round of funding led by Tiger Global.

By: | Bengaluru | Published: November 9, 2016 7:06 AM
Regulatory filings show Fidelity has marked down the valuation of the e-commerce player by 3.2% to .55 per share for the quarter ended August from .29 in the previous three month period.  (Reuters) Regulatory filings show Fidelity has marked down the valuation of the e-commerce player by 3.2% to .55 per share for the quarter ended August from .29 in the previous three month period. (Reuters)

Following yet another markdown by investors, e-retailer Flipkart’s valuation has dropped to a shade below $9 billion, much lower than the peak valuation of $15 billion in June 2015, when the e-commerce player raised $700 million in a round of funding led by Tiger Global.

Regulatory filings show Fidelity has marked down the valuation of the e-commerce player by 3.2% to $81.55 per share for the quarter ended August from $84.29 in the previous three month period. Valic has assigned Flipkart a value of $95.84 per share down from $108.04 in the previous quarter, revealing a markdown of 11.3%. In the quarter ended May, Valic had upped Flipkart’s valuation by 10% and Fidelity by 3%.

In May, Morgan Stanley Institutional Fund lowered the value of its holdings in the e-retailer by nearly16% pegging the firm’s valuation at $9.3 billion; it priced the shares at $87.86 apiece.

The downgrade comes at a time when the e-commerce space in the country is in consolidation mode. Promoters are taking a hard look at their models, attempting to rein in costs as losses mount and investors tighten their purse strings. Although some 30-35 million customers are shopping online today, revenues are not growing fast enough to keep pace with costs.

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Several ventures are either scaling back or trying to identify new sources of revenue and some, especially in the food tech space, have shut operations. “We believe this shake-up may intensify further, leading to the emergence of one or two strong companies within each sub-sector,” analysts at Kotak Institutional Equities wrote in a recent report. They believe the hyper-valuations seen in successive rounds of funding in 2014-15 is correcting. Nevertheless, business houses like that of the Tatas have recently rolled out their e-commerce portals.

Key investors in Flipkart include Tiger Global, Naspers, GIC, DST Global and Accel. Flipkart has cumulatively raised around $3.2 billion the last infusion of $700 million coming in June 2015. Meanwhile, competitor, Amazon has announced a fresh investment of $3 billion for the Indian market.

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