They are back at it. We are talking about mutual funds Valic and Fidelity, who have yet again brought down their Flipkart stake values by 11.3% and 3.2% respectively. To be more specific Valic has brought down its share value to $95.84 per unit for the August ended quarter, from $108.04 assigned to them at the May ended quarter, while Fidelity has brought it down to $81.55 per share for the August ended quarter from $84.29 per share assigned to them at the end of May.
Interestingly, both these mutual funds had actually marked up their Flipkart stake values recently. Fidelity had marked it up by a marginal 3% (T Rowe marked it down by 20% at the same time) while Valic had marked up its stake by 10%.
So does this really change anything ?
On paper it does. With this current markdown, Flipkart’s valuation can range anywhere between the $8Bn and $10Bn mark. Both Valic and Fidelity were a part of the $360Million Series D round, which Flipkart had raised during its 2013 rapid funding spree.
While things do change on paper, Flipkart CEO Binny Bansal doesn’t consider these markdowns significant. If you’d remember, the newly crowned CEO had given a statement, specifically on these valuations, saying,
(Markdowns are) a theoretical exercise by small investors. From our perspective, valuation is when we raise money. From our perspective, valuation is when we raise money. When we raise money, our value will be clear in the market.
Flipkart’s previous valuation, when it raised funds, was close to $15Bn, helping it get into being called, as one of the most valued startups globally. And since the company hasn’t raised any funds post that $15Bn round, the valuation remains there. However, such markdowns by globally reputed Mutual Funds aren’t going to help the company raise funds at a valuation, higher than the $15Bn it achieved at its peak.
Morgan Stanley — one of the bigger players on the MF segment — had also announced a markdown of close to 4% in August. This was the third consecutive markdown Morgan Stanley had announced.
While these markdowns/ups are a rather continuous affair, announced by mutual funds in their filings regularly, the timing and impact such news could have is crucial for Flipkart, specially in times like these.
This could be significant in the much rumoured, hugely anticipated Walmart investment into Flipkart, which multiple reports have claimed, could be to the tune of $1 Billion. At the same time, Amazon continues to pump in more money to its India operations, with no signs of stopping. Alibaba on other hand, is looking to gain a stronghold here, without directly participating, but through massive investments in Paytm and Snapdeal.
We’ve mailed Flipkart for comments on these latest markdowns, and will update this story if we receive a response.
