More investors mark down Flipkart valuation

US mutual funds Valic Co 1 and Fidelity Rutland Square Trust II, which have minority stake in Flipkart, have marked down the value of their stocks in the company

More global investors in India’s largest e-commerce marketplace, Flipkart, are acknowledging the drop in the company’s value, which peaked at $15.2 billion in July last year.

US mutual funds Valic Co 1 and Fidelity Rutland Square Trust II, which have minority stake in Flipkart, have marked down the value of their stocks in the company, reflecting the broader trend among global investors to be more realistic of their investments in emerging firms.

Both marked down their valuation for the second time since July, when they participated in a $700-million fund-raising by Flipkart when it was valued the highest.

In separate filings with the US Securities and Exchange Commission, Valic Co 1 reduced the value of its stake in Flipkart by 29.4 per cent from $139 a share in the August quarter to $98 in the quarter that ended February. Fidelity Rutland Square Trust II marked down the value of the company by 21.1 per cent from $103.97 at the end of November to $82 for the three-month period that ended February.

The Economic Times first reported the news on its website on Wednesday.

Both firms are following mutual funds Morgan Stanley and T Rowe Price, which had marked down the value of their stake in Flipkart by 27 per cent and 15 per cent, respectively. The latest exercise reinforces the fact that Flipkart’s value has eroded in the past few months from $15.2 billion to a little over $9 billion, depending on whom you ask.

Last week, Sachin Bansal, executive chairman of Flipkart, had said he did not read too much into the drop in valuation stating the mark-downs by investors were ‘theoretical’ and not based on transactions.

“I do not think anyone’s valuation has changed just because somebody or small shareholders of these companies have changed their opinion. I do not worry too much about that,” Bansal said at the TiE summit in Delhi.

Eyeing the growing competition from US e-commerce giant Amazon and increasing investments from China’s Alibaba Group in India, investors have started becoming cautious of Flipkart’s ability to remain in the lead. Flipkart’s plans to raise fresh funds to fuel investment and remain in the lead have been stuck, owing to the drop in valuation.

Photograph: Reuters