Morgan cuts Flipkart’s valuation to $5.5 bn
BENGALURU: A mutual fund managed by investor Morgan Stanley has cut down Flipkart’s valuation by around 38%, valuing the company at around $5.5 billion, in one of the most significant writedowns in the company’s history.
This is the fourth such writedown of the e-commerce major by Morgan Stanley in less than a year. According to regulatory filings by Morgan Stanley, Flipkart shares are currently valued at $52.13, compared to $142.24 as of June 30. 2015.
The latest write-down has pushed the valuation of the Bengaluru-based company to a third of its value in less than 18 months. Flipkart had valued itself at around $15 billion during a fundraising in June last year.
“Mutual fund mark-to-market is a purely theoretical exercise and is not based on any real transactions. We are seeing strong traction in our business momentum and operating performance. We continue to focus on innovating for the customer, growing the market and executing our longterm growth agenda,” a Flipkart spokesperson said.
The write-downs come at a time when Flipkart is looking for fresh funds. According to reports, it is in talks with US retail giant Walmart for an investment of $1 billion.
Earlier this year, Flipkart’s biggest competitor in India, Amazon, had announced that it will invest a further $3 billion, topping its earlier commitment to invest $2 billion, in India.
In February, Us-based Morgan Stanley Institutional Fund Trust wrote down its holdings in the company by 27%, bringing the enterprise value at that time to around $11 billion. It was fol lowed by a 15% write-down by T Rowe Price. Again in April this year, Valic Co 1 and Fidelity Rut land Square Trust II had written down their respective holdings in the e-commerce company by 29% and 40%, respectively. By the end of May this year, Morgan Stanley announced its second write-down in Flipkart by 15.5%, and put the enterprise value of Flipkart at $9.39 billion.
Earlier this month, Japanese telecom giant and a major investor in the technology driven startup space, Softbank announced a $550 million write down of its Indian investment mainly in cab aggregator Ola and e-tailer Snapdeal.