India: Flipkart marks own valuation down amid investor caution
FLIPKART, India’s largest homegrown e-commerce players, seems set to bow to the inevitable and reduce its valuation to around US$8 billion as it seeks new funds in the region of US$800 million to US$1 billion.
That’s a drop in valuation of nearly a half since its peak of US$15.2 billion in 2015.
It reflects growing wariness from investors as the country’s e-commerce market slows down and the hype fizzles out.
The company has been seeking new funds for some time now, according to The Financial Express, but disagreements on the value of the company have held things up.
There seems to have been a breakthrough now and sources told the newspaper the deal will likely close in the next four to six weeks.
Funds will come from existing and new investors, according to the sources, which could include Microsoft, eBay and Chinese Internet giant Tencent.
The valuation still seems to be higher than the US$5.37 billion mutual fund managed by Morgan Stanley pegged the company in a markdown last week.
The extra cash will be vital to help the company stave off competition from US rival Amazon, which has promised to spend US$5 billion in the India market.
Chinese biggest e-commerce player Alibaba has also made a move into the market buying a controlling stake in PayTMs e-commerce offering.
Despite the competition, the sheer potential of the Indian market means companies like Flipkart will never have to struggle too much for funds, Ravi Gururaj, a Bangalore entrepreneur and co-founder of the India chapter of Harvard Business Angels, told Livemint.
“As long as startups show they are slogging a path to profits, investors will always be there,” he said.
“Who can afford to ignore a market already bigger than the largest market in Europe?”