Mor­gan Stan­ley fund marks down Flip­kart stake value by 27pc

The Pak Banker - - COMPANIES/BOSS -

A mu­tual fund in­vestor in Flip­kart Ltd, In­dia's largest e-com­merce firm, has slashed the value of its hold­ings by as much as 27%, the lat­est in­di­ca­tion that the in­vestor rush of the past two years into In­dian star­tups has led to un­sus­tain­able val­u­a­tions. Mor­gan Stan­ley In­sti­tu­tional Fund Trust val­ued its stake in Flip­kart at $ 58.9 mil­lion as of 31 De­cem­ber, down from $ 80.6 mil­lion in June 2015. The com­pany re­ported the num­ber late Fri­day in a fil­ing with the Se­cu­ri­ties and Ex­change Com­mis­sion, the US stock mar­kets reg­u­la­tor.

Mor­gan Stan­ley In­sti­tu­tional Fund Trust also cut the value of its stake in other high fly­ing star­tups in­clud­ing file stor­age com­pany Drop­box Inc. and data an­a­lyt­ics com­pany Palan­tir Tech­nolo­gies Inc. The news was first re­ported by the In­for­ma­tion, a tech news web­site. Flip­kart didn't im­me­di­ately re­spond to an email seek­ing com­ment.

Flip­kart was val­ued at $15 bil­lion when it re­ceived $700 mil­lion from Tiger Global Man­age­ment, Qatar In­vest­ment Au­thor­ity and other in­vestors in June. That was its fourth round of fund rais­ing in a year. Its val­u­a­tion shot up roughly 5 times from $2.5-3 bil­lion in May 2014.

Mor­gan Stan­ley's lat­est es­ti­mate im­plies that the mu­tual fund cur­rently val­ues Flip­kart at $11 bil­lion. The mu­tual fund's mark­down con­firms Mint re­ports of a cor­rec­tion in val­u­a­tions of In­dia's e- com­merce com­pa­nies in­clud­ing Flip­kart.

China's Alibaba Group, which has backed Paytm and Snapdeal, is look­ing to in­crease its foot­print in In­dia and is ex­plor­ing the ac­qui­si­tion of a stake in In­dia's largest In­ter­net firm Flip­kart Ltd, ac­cord­ing to three peo­ple fa­mil­iar with the mat­ter. The talks are at a very ini­tial stage and the like­li­hood of a deal is a func­tion of Flip­kart's will­ing­ness to of­fer a dis­count on its cur­rent val­u­a­tion of $15 bil­lion, the three added, ask­ing that they not be named.

Mint re­ported on 4 Fe­bru­ary that China's Alibaba Group is in early talks to buy a stake in Flip­kart and in­crease its hold­ing in Flip­kart ri­val, Snapdeal. The talks are at a very ini­tial stage and the like­li­hood of a deal is a func­tion of Flip­kart's will­ing­ness to of­fer a dis­count on its cur­rent val­u­a­tion of $15 bil­lion, Mint had re­ported then. There are not too many tak­ers for In­dia's top e-com­merce firms at their cur­rent val­u­a­tions, prompt­ing both Flip­kart and Snapdeal (run by Jasper In­fotech Pvt. Ltd) to ap­proach Alibaba Group for cash.

Alibaba is in talks to $4 bil­lion in loans from at least eight banks, partly to fund ac­qui­si­tions, the Wall Street Jour­nal re­ported on Fri­day. Mor­gan Stan­ley's fil­ing comes nearly two months af­ter Flip­kart ap­pointed co-founder Binny Bansal as its new chief ex­ec­u­tive of­fi­cer, re­plac­ing Sachin Bansal, who be­came ex­ec­u­tive chair­man. An­a­lysts said Flip­kart made the change to in­crease its fo­cus on keep­ing arch-ri­val Ama­zon In­dia at bay.

Over the course of 2015, Ama­zon gained mar­ket share in In­dia at the ex­pense of both Flip­kart and Snapdeal, ac­cord­ing to pub­licly avail­able data and sev­eral com­pany ex­ec­u­tives. It's clear Ama­zon's rapid ex­pan­sion in In­dia, fu­elled by an un­prece­dented spend­ing spree on ad­ver­tis­ing, dis­counts and lo­gis­tics and its tech­nol­ogy ex­per­tise, is af­fect­ing Flip­kart and Snapdeal. Early last year, Flip­kart set a tar­get of gen­er­at­ing an­nu­al­ized gross mer­chan­dise value (GMV) of $8 bil­lion by De­cem­ber. How­ever, the com­pany's cur­rent av­er­age monthly an­nu­al­ized GMV is roughly $5 bil­lion, Mint re­ported on 17 Fe­bru­ary.

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