Sameer Ranjan Bakshi
Flipkart, the home-grown e-commerce major, continues to face the brunt of valuation markdowns with another of its US-based mutual fund investor (MFI), Optimum Fund, trimming the value of its holding by 3.26%. Optimum Fund, which is part of the Macquarie Group, has valued its holding in Flipkart at $93.15 a share at the end of December quarter, show regulatory filings with the US Securities and Exchange Commission, valuing the company at $10.4 billion. At the end of the September quarter, Flipkart was valued at $10.8 billion at $96.29 a share.
Optimum Fund had invested in Flipkart during the funding rounds of Series A, C, E, G and H, and holds 18,850 shares. On a y-o-y basis, the MFI has slashed its valuation of Flipkart by over 30%. It valued Flipkart shares at $93.15 per piece during the December quarter of 2016 compared with $135.12 in the year-ago period.
Flipkart has faced similar such steep markdowns by Morgan Stanley and Fidelity. However, it has not been a case of consistent markdown of Flipkart by Optimum as it had increased Flipkart’s valuation between December 2014 and December 2015 by 19%.
On Tuesday, Flipkart had witnessed another markdown by Morgan Stanley, which lowered the value of its holding by 3.12%, valuing it at $5.37 billion. These markdowns come at a time when Flipkart is scouting for a fresh round of funding to grow the market and fend off competition. The e-commerce major, which has cumulatively raised $3.15 billion till now, had its last round of funding in June 2015 of $700 million.
On the other hand, its nearest competitor Amazon has committed an investment of $5 billion in the years to come. Besides Amazon, Flipkart will also have face the upcoming threat from another deep-pocketed player in Alibaba, which has made its entry into the Indian market through its investee company Paytm.
Flipkart has also been beset with several top-level exits and business restructuring in the recent past as seen in the case of Kalyan Krishnamurthy (former executive at Flipkart’s top investor Tiger Global) taking over from founder Binny Bansal as CEO. Bansal has been moved to a new position as group CEO, while the other co-founder, Sachin Bansal, continues as executive chairman. Recently, Flipkart shut down its customer-to-customer courier service within months of its launch. It has also pulled the plug on hyperlocal delivery services being piloted across Bengaluru since March last year.
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The recent rounds of serial valuation markdowns for several e-commerce companies are a cause of concern for the start-ups business community that is making it difficult for them to raise new rounds of funds in these uncertain times. While few e-commerce start-ups have shut down, some like Snapdeal are struggling and have laid off hundreds of employees while undergoing a massive restructuring exercise.