Despite growing popularity of e-commerce in India, issue of profitability remains a huge concern for companies who are bleeding investor money through heavy discounts. And early investors, despite IPO promises are eyeing an early exit from even the biggest brands in the segment.
The recent to take an exit is Flipkart’s second largest investor by stake after Tiger Global, Accel Partners. As per an Economic Times report, the mid/late-stage investor has now sold their partial stake worth $100 million to Qatar Investment Authority. The deal valued the company at $15 billion — which is its current valuation — and closed in November according to unnamed sources.
Qatar Investment Authority is already an investor in Flipkart and had participated in Flipkart in the $700 million investment round which took place in December 2014. This is the second instance of Accel partners selling their stake in the Indian e-commerce behemoth, as last year, it had sold shares worth more than $80 million, to undisclosed buyers.
Earlier this year, other investors namely Helion Ventures and IDG Ventures had made full and partial exits respectively from Flipkart. The company was valued at $12.5 billion at that time.
It is noteworthy that despite high GMV (around $4 billion) and sky-high valuations which are often termed as inflated and unreasonable by many experts, cash flow and profitability is now a major concern for Flipkart and other players in this segment.
Many investors are now reportedly showing interest in profit-making investments instead of continuing investing in the companies who are relying on investor money to capture the market.
Flipkart has not made given any official statements on this recent report. However, it has already begun talking about eyeing profitability in coming 2-3 years.
It has made several strategic investments to build a logistic network as well as to support its tech platform. Furthermore, it has also introduced high margin categories such as furniture, homes and travel booking on its platform.