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Morgan Stanley is back at it, marks down stake in Flipkart by 15.5 %, now values it at $9.39 billion

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In another major blow to Indian e-commerce behemoth Flipkart, a Morgan Stanley managed fund has slashed its stake in Flipkart by 15.5%. This is the second consecutive markdown by Morgan Stanley in Flipkart following the 27% markdown in the previous quarter.  

The markdown was carried out by a mutual fund investor in Flipkart named Morgan Stanley Mutual Fund Trust. The fund has marked its share in Flipkart at $87.9 per share as of 31 March 2016, 15.5% down from $103.97 per share as of December 2015.

As compared to the value in June 2015 at $142.24 per share, the current value is 38.5% lower signifying the huge downfall of Flipkart in last one year. The latest markdown has estimated the valuation of Flipkart at $9.39 billion, down from the staggering $15 billion post its $700 million funding round in June last year.

It is not just Morgan Stanley which has contributed to markdowns in Flipkart. Shortly after its first markdown in February, another mutual fund managed by T Rowe Price had marked down its stake in Flipkart by 15% in April.

Earlier this month, two other mutual fund investors namely Fidelity and Valic also marked down their stakes by 20%. And this was their second instance of markdown as they had also slashed their stakes in Flipkart by 24% and 12% respectively in last quarter.

This continuous streak of markdowns by investors in Flipkart this year has not just affected its valuation but also its prospects of raising new funds.

Flipkart has been looking to raise fresh fund since the end of last year but has not experienced any success in convincing investors.

The company has reportedly been denied fresh funds by many investors at the $15 billion valuation from the last round. Flipkart is also said to have approached Chinese giant Alibaba, who is also an investor in Snapdeal and PayTm, for funds but faced similar response.

On the other hand, CEO of Flipkart, Binny Bansal, recently played down these incidents of markdowns in an interview to the ET.  Calling them “mostly a theoretical exercise by small investors”,  Bansal said that valuations would only come into play when they raise money after which their value would be clear in the market.

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