Morgan fund reduces Flipkart’s valuation

FLIPKART IS CURRENTLY IN TALKS TO RAISE FRESHFUNDSATA VALUATION OF $1012 BILLION

India’s most valuable internet startup Flipkart, which is currently in talks with new and existing investors to raise up to $1.5 billion in fresh funds, has faced yet another markdown in its valuation from a mutual fund managed by Morgan Stanley.

This marks the fifth consecutive quarter in which Morgan Stanley has marked down the value of Flipkart’s shares.

In a regulatory filing with the US Securities and Exchange Commission, Morgan Stanley Institutional Fund Trust has valued each share of Flipkart Online Services Pvt Ltd at roughly $50.51 apiece, down from $52.13 a share during the September quarter. The Morgan Stanley-owned mutual fund, which invested in Flipkart during its Series D round, currently holds 566,827 shares in the online retailer.

That indicates a valuation of about $5.37 billion—a marginal cut compared to the previous markdown from Morgan Stanley when it slashed Flipkart’s valuation by about 38% to $5.54 billion.

Earlier in February, Mint first reported that Flipkart was in talks for a fund-raising of up to $1.5 billion from new investors, including Tencent Holdings Ltd, ebay Inc, Paypal Holdings Inc and Microsoft, at a valuation of $10-12 billion.

In January, Mint reported that US mutual fund giant Fidelity Investments had slashed the valuation of its holdings in Flipkart by more than a third in November to about $5.58 billion.

The latest valuation from Morgan Stanley is likely to be off the mark, as Flipkart is currently in talks to raise fresh funds at a valuation of $10-12 billion, according to at least three people aware of Flipkart’s present fund-raising talks.

However, a valuation of $10-12 billion would still indicate that India’s e-commerce poster-boy is likely to witness a so-called “down round” when it next raises capital, given that it last raised funds at a peak $15-billion valuation back in 2015.

And while the recent valua tion markdowns from severa mutual funds, including Fidelity Investments, Vanguard Group and T Rowe Price, might not reflect Flipkart’s exact current valuation, the markdowns in a way reflect prevailing investor sentiment that most of India’s new-age Internet startups are overvalued.

Flipkart, however, isn’t the only large Indian “unicorn” startup facing a mark down in its valuation.

Earlier in February, Mint reported that Vanguard Group had slashed the valuation of its stake in India’s largest cab-hail ing service Ola by over 40%, peg ging its valuation at about $3 bil lion, down from a peak valuation of $5 billion in 2015.