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Morgan Stanley marks down Flipkart’s valuation again amid fundraising talks

LiveMint logoLiveMint 28-02-2017 Anirban Sen

Bengaluru: India’s most valuable Internet start-up Flipkart, which is currently in talks with new and existing investors to raise up to $1.5 billion in fresh funds, has faced yet another markdown in its valuation from a mutual fund managed by Morgan Stanley.

This marks the fifth consecutive quarter in which Morgan Stanley has marked down the value of Flipkart’s shares.

In a regulatory filing with the US Securities and Exchange Commission, Morgan Stanley Institutional Fund Trust has valued each share of Flipkart Online Services Pvt. Ltd at roughly $50.51 apiece, down from $52.13 a share during the September quarter. The Morgan Stanley-owned mutual fund, which invested in Flipkart during its Series D round, currently holds 566,827 shares in the online retailer.

That indicates a valuation of about $5.37 billion—a marginal cut compared to the previous markdown from Morgan Stanley when it slashed Flipkart’s valuation by about 38% to $5.54 billion.

Earlier in February, Mint first reported that Flipkart was in talks for a mammoth fundraising of up to $1.5 billion from new investors, including Tencent Holdings Ltd, eBay Inc., PayPal Holdings Inc. and Microsoft, at a valuation of $10-12 billion.

In January, Mint reported that US mutual fund giant Fidelity Investments had slashed the valuation of its holdings in Flipkart by more than a third in November to about $5.58 billion.

The latest valuation from Morgan Stanley is likely to be off the mark, as Flipkart is currently in talks to raise fresh funds at a valuation of $10-12 billion, according to at least three people aware of Flipkart’s present fundraising talks.

However, a valuation of $10-12 billion would still indicate that India’s e-commerce poster-boy is likely to witness a so-called “down round” when it next raises fresh capital, given that it last raised funds at a peak $15 billion valuation back in 2015.

And while the recent valuation markdowns from several mutual funds, including Fidelity Investments, Vanguard Group and T. Rowe Price, might not accurately reflect Flipkart’s exact current valuation, the markdowns in a way reflect prevailing investor sentiment that most of India’s large, new-age Internet start-ups are overvalued.

Flipkart, however, isn’t the only large Indian “unicorn” start-up facing a mark down in its valuation.

Earlier in February, Mint reported that Vanguard Group had slashed the valuation of its stake in India’s largest cab-hailing service Ola by over 40%, pegging its valuation at about $3 billion, down from a peak valuation of $5 billion in 2015.

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