Markdown: Investors reduce valuation of their holding in Flipkart

Flipkart’s total valuation reduced to $8.7 billion against $9.0 billion as per Fidelity’s numbers

Written by Pranav Mukul | New Delhi | Published:October 30, 2016 12:12 am
Flipkart, Flipkart investors, Flipkart shares, Flipkart market, ecommerce, Walmart, india news, business news On October 25, Flipkart’s chief financial officer Sanjay Baweja resigned from his post.

At a time when India’s largest e-commerce company Flipkart is in talks with US retail giant Walmart Inc to raise funds through investment, two of its existing investors — Fidelity Rutland Square Trust II and Valic Co I — have reduced the valuation of their holding in the Bengaluru-based firm by 3.2 per cent and 11.3 per cent, respectively.

According to filings made with the US Securities and Exchange Commission, mutual fund investor Fidelity Rutland has marked down the price of Flipkart’s shares, which it acquired in October 2013, to $81.55 apiece as on August 31, 2016, compared with $84.29 apiece as on May 31. Another investor Valic Co I has also priced down Flipkart’s stock to $95.84 per share in its books as on August 31, against $108.04 apiece as on May 31.

With these markdowns, Flipkart’s total valuation reduced to $8.7 billion against $9.0 billion as per Fidelity’s numbers, and to $10.2 billion from $11.5 billion according to Valic Co’s numbers.

Incidentally both these investors had, in the previous three-month period, increased Flipkart’s valuation in their books. And while this seesaw of valuations for the e-tailer continues, operationally, too, the company is facing the chill wind of some of its top talent leaving.

On October 25, Flipkart’s chief financial officer Sanjay Baweja resigned from his post. An industry observer said that Baweja was the key person at the e-commerce company responsible for raising funds, and him quitting at a time when Flipkart is in midst of bringing in more investment raises several flags.

Baweja’s exit was preceded by several other exits from Flipkart during the last one year, including chief product officer Punit Soni, head of Legal Rajinder Sharma, head of Seller Business and Ecosystem Manish Maheshwari, in addition to Flipkart unit Myntra’s founder Mukesh Bansal, who was leading Flipkart’s commerce platform post its acquisition of the online fashion retailer.

Apart from Fidelity Rutland and Valic Co, another Flipkart investor Vanguard Group has also made a filing with the US securities regulator, it has maintained the valuation of its holding in the company during the June-August quarter.

An e-mail sent to a Flipkart spokesperson seeking the company’s comments on the latest development did not elicit any response.

Based on its previous valuation markdowns, sector analysts had suggested that growing concerns from investors signal a call for change in the current growth-oriented but loss-making business models of e-commerce companies. In June, Flipkart made an effort to ramp up its revenues and pare its losses by increasing the commission it charges the sellers on its marketplace by 5-6 per cent across several segments such as fashion and mobile accessories.