Flipkart faces markdown to $7.9 Bn by mutual fund investor Valic

Flipkart
Image Credit: Reuters

India’s most valuable startup Flipkart has suffered a markdown as Mutual fund investor Valic Co. slashed its valuation. The mark-down has surprised many as Flipkart had raised $3 billion from blue-chip investors including Softbank, Microsoft, and Tencent among others.

Valic marked down Flipkart’s valuation slightly to about $7.9 billion in its quarterly report, according to a Mint report. The mutual fund investor had valued the Bengaluru-based etailer at roughly $8.5 billion. Importantly, it had raised last round at a valuation of about $11.6 billion in August this year.

For the three months (June to August), Valic valued each Flipkart share at $88.11, down from $94.27 in the previous quarter. Previously, Flipkart slapped by mark-downs from mutual fund investors such as Fidelity and Morgan Stanley. Morgan Stanley had marked down online marketplace’s valuation fifth time in a row in March this year.

During January this year, T. Rowe and Fidelity’s mutual fund investing arm had trimmed Flipkart’s valuation. Mutual fund investors such as Morgan Stanley, Fidelity Investments, Valic and Vanguard Group Inc. are divided over the company’s valuation.

The markdown has come at a time when Flipkart had consolidated its position through impressive turnaround under the leadership of Kalyan Krishnamurthy.

Under Krishnamurthy, the company pulled in gross sales of more than Rs 2,600 crore in both December 2016 and January 2017 while Amazon generated gross sales of roughly Rs 2,300 crore, on average, in these months.

Flipkart isn’t the only Indian unicorn facing the prospect of a down round. Cab-hailing service Ola was marked-down by over 40% by US-based investment firm Vanguard Group. Zomato also suffered markdown last year, however, management of the aforementioned companies are unfazed by mark-downs.

While Flipkart co-founders termed it as a theoretical exercise by mutual fund investors, Zomato’s CEO Deepinder Goyal claimed that ‘nobody who knows our business has marked down our valuations’.

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