After facing multiple rounds of series markdowns and flushed top managements, Flipkart seems to be getting back on its feet. Last week, Fidelity had marked up its stake in Flipkart by a marginal 3% and today another investment firm, Valic has offered some respite to the suffering Indian e-commerce company.
According to ET, Valic has taken a cautious look at Flipkart’s future prospects and has decided to mark up the valuation of its shares by 10 per cent. The share price has now risen to $108.04 for the May-ended quarter as compared to $98.19 per share in the previous quarter that ended in February.
This markup now puts Flipkart’s value at around $11.55 billion as compared to the previous $10.5 billion — which has been pegged by other markdowns as well. This is the highest valuation that any of the investments firms are currently quoting for Flipkart.
It is, however, still quite steep when compared to the company’s peak valuation of $15.2 billion when it raised fund almost an year ago. The company had managed to raise another $700 million at that mind-boggling valuation.
Prior to this mark up, Valic had twice marked down its stake in India’s (previous!?) startup poster boy. It had previously marked down its stake by 20.2 per cent and 12 per cent in two consecutive quarters respectively.
Valic had joined Flipkart’s mission to become India’s #1 e-commerce platform in 2013, when it had picked up share of the company in its Series D round of funding. Flipkart had then raised about $360 million in two tranches.
Multiple Markdowns
Markdowns, along with employee exits and restructuring, have formed major headlines for the Indian e-commerce behemoth this year. It all started when a Morgan Stanley managed fund marked down Flipkart’s valuation by 27 per cent in February. This was followed by another markdown by 15.5 per cent in May.
And what further ensued for Flipkart was nothing less than a hellish nightmare. Other investors no longer saw Flipkart as a unicorn and started marking down their investments as well. T Rowe Price marked down its valuation in Flipkart by a total of 35 per cent in the last year, to $96.29 per share, while Vanguard marked down its stake by 28 per cent.
Recently, however, the company is seeing investors take a round about and again marking up their stakes in the company. As stated above, Fidelity has marked up the valuation marginally increasing it from $8.8 billion to $9 billion(which is still isn’t enough).
According to various reports, the company wants to raise fresh funds at that valuation only instead of going for a down round given its current situation. CEO Binny Bansal had also called these markdowns mostly a theoretical exercise by investors. He had maintained that the valuation would only come into play when they would raise fresh funds.
On the contrary, it recently bought fashion retailer Jabong through Myntra and is also planning to invest over $100 million for building an independent payments business.
The company is also working towards cutting costs, restructuring, increasing efficiency, and achieving profitability. It recently modified its hiring and procurement strategy and unified departments towards the same objectives.
