Files application for conversion into public firm
In yet another big round of fund raising, India’s largest e-commerce player, Flipkart, on Saturday announced it had got a cash infusion of $700 million, raising a total of nearly $2 billion in 2014. The latest round of funding was led by new investors Qatar Investment Authority, Baillie Gifford, Greenoaks Capital, Steadview Capital and T Rowe Price Associates, along with existing investors DST Global, GIC, ICONIQ Capital and Tiger Global. Flipkart’s valuation is now expected to be around $11-12 billion.
Having raised a cumulative funding of $2.5 billion from various investors, Flipkart appears to be preparing for an imminent initial public offering, which will provide an exit option for a clutch of private equity (PE) investors, said industry sources. “Flipkart’s IPO is imminent. The money invested has got so big that these investors can exit only through an IPO, which might happen over the next couple of years, as the process with multiple approvals might take 12-18 months,” eTailing India founder Ashish Jhalani told FE. He added: “PE is not for dividends.
The valuation multiples will happen only if the IPO happens at around $20 billion. Even this fund raising is meant to be preparing for an IPO valuation that will do justice to its investors’ faith in the company.”
Flipkart’s biggest competitor in India, global e-commerce giant, the $75-billion Amazon, had announced $2 billion for its Indian operations in July, a day after Flipkart announced $1 billion fund raising, then the biggest funding ever for an Indian e-commerce player. The Indian e-commerce industry, expected to be worth $15 billion by 2016, has seen humungous fundraising this year, with Snapdeal also raising $627 million from Japanese telecom major SoftBank. Snapdeal has so far raised a cumulative funding of over $1 billion.
Meanwhile, Flipkart Limited (incorporated in Singapore) has filed with Accounting and Corporate Regulatory Authority (ACRA), the Singapore regulator, to be converted into a public company. The Singapore regulator stipulates that if a company has more than 50 investors, it should be converted into a ‘public company’. “This filing ensures we are in compliance with the laws of Singapore, and is in no way indicative of any upcoming IPO or of any corporate activity that the company is engaged in, either in Singapore or any other part of the world,” Flipkart said in a press statement.
Bengaluru-based Flipkart’s founders Sachin Bansal and Binny Bansal (not related) had earlier said they want Flipkart to be the country’s first $100-billion Internet company. According to industry estimates, the company is reported to have a gross merchandise value of $4 billion on an annual run rate basis. The company said these funds would be used towards “long-term strategic investments in India and to build a world-class technology company, delivering superior customer experiences”.
Said Ravi Gururaj, chairman of Nasscom Product Council, “More than the fund requirement, these partners bring in great reputation, credibility and experience.”
For the current round of funding, Flipkart’s existing investors, DST Global, GIC, ICONIQ Capital and Tiger Global have also put in money, while the company’s other existing investors Accel Partners, Dragoneer and Sofina Capital did not participate in this round.