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Flipkart to sell small stake to Times group in exchange for cash and advertisements

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According to various media reports, Indian e-commerce major Flipkart is in talks with Bennett, Coleman and Co Ltd (BCCL) to sell a small stake of worth 500 crores. In return, Flipkart will get cash as well as advertisements over many years in media properties of BCCL like The Times of India, Economic Times, ET Now, Times Now etc.

Livemint cited four people in its report who refused to be named as the talks are still in process and nothing has been finalised yet. One of the four people said that “the talks are progressing slower than what both companies want but a deal is likely to happen”.

The deal will reportedly take place through BCCL’s unit Brand Capital which handles such private treaties for the company. Both companies have declined to comment on these reports so far.

This year Flipkart has suffered a series of markdown in its valuations by investors including mutual funds by Morgan Stanley, T-Rowe Price, Fidelity, and Valic.

The most recent was the second consecutive markdown of 15.5% in this quarter by Morgan Stanley managed mutual fund who had earlier slashed its stake value in Flipkart by 27%.

And if you are wondering whether the new deal with BCCL group would have any effect on already dwindling valuations of Flipkart, then the answer is probably no. This is because a small stake of 500 crores will approximately amount to 0.5% stake in the company and that too if one considers a valuation of $15 billion (very unlikely).

However, with access to the advertisements in country’s most popular media channels and newspapers, it could certainly contribute in helping Flipkart reach common people.

On the other hand, BCCL already struck a similar deal with Flipkart’s rival Snapdeal back in February. In fact, it has invested and is a part of many Indian startups and digital properties, mostly through its Internet arm Times Internet.

These include investments in Uber, online education platform Coursera, personal assistant app Haptik, real estate listings website Magicbricks, and popular music streaming platform Gaana.com.

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