Flip­kart’s Val­u­a­tion may Top $2.5 Bil­lion

The Economic Times - - Econ­omy -

DST Global, founded by Rus­sian in­ter­net ty­coon Yuri Mil­ner, is prob­a­bly best known for buy­ing a 1.96% stake in Face­book for $200 mil­lion in 2009. To­day the fund, which has stakes in so­cial gam­ing com­pany Zynga and group buy­ing com­pany Groupon, is among the largest in­sti­tu­tional in­vestors in Face­book.

Flip­kart had raised $360 mil­lion (over .` 2,100 crore) in two tranches last year at a val­u­a­tion of $1.6 bil­lion (over .` 9,300 crore). This time too the com­pany could opt to raise funds in mul­ti­ple rounds, said one of the sources. “It could be larger than last year’s fund­ing,” he said. With Myn­tra in its kitty, the com­pany’s val­u­a­tion could breach $2.5 bil­lion (over .` 14,600 crore). Flip­kart has plans to in­vest over $100 mil­lion (over .` 585 crore) in just the fash­ion cat­e­gory over the next 1218 months. Flip­kart chief ex­ec­u­tive Sachin Bansal de­nied that the com­pany was rais­ing fresh in­vest­ment at the time of an­nounc­ing the deal to buy Myn­tra.

He, how­ever, said they would opt for fund­ing if “we find some­body who can add lot more value than just money.” Bansal had ad­mit­ted that Flip­kart’s man­age­ment is “talk­ing to peo­ple all the time.”

Flip­kart is rapidly scal­ing up its op­er­a­tions as it com­petes with an in­creas­ingly ag­gres­sive Amazo- n.in and home-grown com­peti­tor Snapdeal that raised $100 mil­lion (.`585 crore) in fund­ing last week.

Amazon has been ag­gres­sively in­vest­ing in its In­dia op­er­a­tions and ex­panded to over 22 prod­uct cat­e­gories. It has launched cus­tomer ser­vice ini­tia­tives like next-day and same-day de­liv­ery ahead of com­pe­ti­tion and em­barked on a mas­sive mar­ket­ing cam­paign.

Flip­kart, which crossed $1 bil­lion (over .` 5,850 crore) in sales in March, too has launched cus­tomer ser­vice ini­tia­tives like same-day de­liv­ery in over 20 cities and ath­ome tri­als for cer­tain fash­ion cat­e­gories.

As or­ders race cross the 5-mil­lion-a-month mark, Flip­kart will have to con­tinue in­vest­ing in its back­end op­er­a­tions in a cut­throat mar­ket. The com­pany, along with other play­ers like Amazon and Snapdeal, is also con­tin­u­ing to dis­count heav­ily.

The com­pany’s ex­pan­sion has been funded with risk cap­i­tal. But de­spite mop­ping up over $540 mil­lion (over .` 3,100 crore) in pri­vate eq­uity fund­ing so far it is not prof­itable. “Prof­itabil­ity is not the goal right now,” said Flip­kart’s Bansal, while speak­ing about the Myn­tra ac­qui­si­tion. “We are in a dom­i­nant po­si­tion now, and we should con­tinue to in­vest to con­tinue to be the leader and grow the mar­ket and ahead of the mar­ket.”

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