Vanguard, one of the world’s largest investment companies, has marked up the valuations of two of India’s e-commerce poster-companies, Flipkart and Ola. While Flipkart shares have been marked up 56% by the US-based investor, cab aggregator Ola saw a 12% mark-up in its valuation. The mark-up by Vanguard comes at a time when both Flipkart and Ola are reportedly in talks to raise more funds from SoftBank and Tencent, respectively. As per the latest filing with the US Securities and Exchange Commission (SEC), Vanguard World Fund has raised the value of its investments in Flipkart by marking up its shares to $107.7 for the three months ended May, from $68.73 per share during the previous quarter.
The mark-up comes after Vanguard maintained a constant valuation for Flipkart for the previous two quarters. Vanguard holds about 4.7 lakh shares in Flipkart. Vanguard, which also holds about 1.66 lakh shares in ANI Technologies, which manages Ola, marked up its shares to $209.5 for the quarter ending May, compared to $187.5 per share as on February 28, 2017. Vanguard follows a financial year that stretches from June to May.
While companies like Flipkart don’t agree with the markdowns by funds, it will definitely cheer employees of these companies who have been given ESOPs as part of their remuneration. Flipkart had to issue additional stock options to employees, whenever its valuation fell. This was being done to ring-fence the ESOPs, from a drop in share prices. The additional grant of shares were made so that the total dollar value of shares allotted to employees remained unchanged. Flipkart raised $1.4 billion of funding at a valuation of $11.6 billion in April that was lower than its peak valuation of $15 billion.
Ola’s mark-up comes at a time when the cab aggregator is looking to raise the next round of funding at a higher valuation, something that will help to gain market share in India. Disgruntled driver-partners have been leaving Ola ad Uber platforms in droves, with reducing incentives. In February, Ola had raised funding in the range of $300-350 million led by Japanese investor Softbank, at a downround of $3.5 billion in February. This was significantly lower than its valuation in November 2015, where the company had raised $500 million at a valuation of $5 billion.