• Flipkart stake marked down 20% further by 2 investors

    Two of Flipkart’s mutual fund investors have further marked down the value of their holdings in the company by 20%, the funds have disclosed in recent days.

    Fidelity Rutland Square Trust II, a mutual fund managed by Fidelity Investments has marked the value of their Flipkart shares at $82 per unit for the February ended quarter, down 21.1% from $103.97 per unit assigned to them at the end of November 2015.

    Valic Co, on the other hand, has marked the value of their Flipkart shares at $98.19 per unit for the February ended quarter, down 20.2% from $123.11 assigned to them at the end of November 2015.

    This is the second consecutive markdown from both the mutual funds. Fidelity and Valic had earlier marked down their holdings in the company by 24% and 12% respectively in the previous quarter.

    The markdown pegs Flipkart’s valuation between $9.2 billion to $10.7 billion, as compared to the $15.2 billion when it last raised capital in July 2015.

    This follows a 15% markdown by T Rowe Price-managed mutual fund last month and a 27% markdown by Morgan Stanley-backed mutual fund in February this year.

    Valic and Fidelity had picked up shares in Flipkart as a part of its series D round of funding in 2013, when the India’s largest e-commerce player had raised $360 million in two tranches.

    These markdowns comes amid a tough fundraising climate and will likely make it tougher for Flipkart to raise funds at its preferred valuations and force it on the back foot in its ongoing fundraising negotiations with investors.

    Flipkart has been looking to shore up a new round of funding since late 2015 to maintain its leadership position in India against rival Amazon who has infused at least Rs 6,700 crore since January 2015 into its India unit, with over half of that amount being invested since December.

    Earlier this week, Flipkart co-founder and executive chairman Sachin Bansal hinted at a tougher financial climate, but also attributed it to regular financial cycles.

    “A lot of times people look at a down round negatively and it is not a pleasant situation for any company, but the fact is that almost every Internet company around the world go through it. In 2012, we raised at a billion (dollar valuation) and $750 million after that. A lot of times financial cycles govern this and even today we are seeing some of that happen.” Bansal said at TiE Delhi-NCR organized India Internet Day.

    “The way I think about it is we need to keep our business interests ahead of everything else. We need to make sure the business is well capitalized and it is growing at a healthy pace. In long term, all these things wouldn’t matter. I would therefore keep my head down and keep executing. If the business needs funds, raise the minimum possible at the available terms and move on” Bansal said. We’ve written to Flipkart for a comment and will update once we hear back. David Andrews Authentic Jersey

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