FLOWS TO E-COMMERCE SLOW DOWN
online grocer BigBasket picking up $150 million from a clutch of new and existing investors, deal flow in the e-commerce and internet spaces picked up; else 2016 so far has been somewhat dull, reports fe Bureau in Mumbai. Inflows in February stood at $218 million, down 16% year-on-year and meaningfully below the average monthly fund inflows in CY15 of $412 million. Kotak Institutional Equities noted that while December and January are seasonally weak since funds are typically assessing performance and finalising their investment plans for the year, the persisting weakness in February 2016 is a clear indicator of a slowdown.
“The bulk of the Feb ’16 funding comprised $200 mn raised by Snapdeal, with practically no other major fundraisings seen,” the report said.
Nevertheless, 2016 could turn out to be an exciting year if Alibaba , which is an investor in One 97 Communications and Snapdeal, enters India as an online marketplace player. On March 18, Alibaba group president J Michael Evans told newspersons the Chinese e-commerce player was planning to enter the ecommerce business in India in 2016, saying the opportunity was exciting against the backdrop of Digital India. Media reports say Alibaba may have approached Tata Sons for a possible partnership.
Meanwhile, however, investors are turning cautious.
In January, Morgan Stanley Institutional Fund Trust, a minority investor in Flipkart, disclosed a write-down in the value of its holdings in the company by as much as 27% in a filing with the Securities and Exchange Commission (SEC). Flipkart was valued at $15 billion when it received $700 million from Tiger Global Management, Qatar Investment Authority and other investors in June. Morgan Stanley’s latest estimate implies the mutual fund now values Flipkart at $11 billion.
Interestingly, app ranking data from App Annie show that e-tailers dropped out of the top-10 ranking for the first time in the past four months in February. Further, Amazon overtook Flipkart to emerge as the highest ranked e-tailer app.