According to an ET report, Morgan Stanley, as of September 2016, has marked the value of its Flipkart shares at $52.13 per share, as compared to $84.29 per share in June 2016.
This pegs Flipkart’s valuation at $5.54 Bn, compared to $9 Bn in the previous quarter and $15.2 Bn when it last raised capital in July 2015.
Morgan Stanley’s fund had first invested in the e-commerce marketplace when it raised $160 Mn in October 2013. The decrease in valuation showdown for the e-commerce giant began in February 2016, when Morgan Stanley marked down Flipkart shares by 27%.
Later in May 2016, for the second time in a row in a successive quarter, Morgan Stanley Mutual Fund Trust, lowered the value of its shares in Flipkart by 15.5%. It pegged Flipkart valuation at $9.39 Bn.
This is the fourth consecutive markdown by Morgan Stanley in last nine months. Prior to this, Flipkart witnessed a series of markdowns from other mutual fund investors like T Rowe Price, Fidelity, and Valic over the past year. In April 2016, a US-based mutual fund managed by T.Rowe Price marked down its shares in by 15%. T Rowe Price had invested about $100 Mn in Flipkart in December 2014, when the firm raised $700 Mn funding.
Earlier this month it was reported that Valic and Fidelity too have marked down Flipkart shares. Valic marked down the valuation of Flipkart shares from $108.04 (May end quarter) to $95.84(August end quarter), a decrease of 11.3%. On the other hand, Fidelity has marked down the valuation of its Flipkart shares from $84.29 per share assigned to them at the end of May to $81.55 per share for the August-ended quarter.
Fidelity and Valic hold small amounts of Flipkart stock, with their holdings together worth less than $6 Mn. But the markdowns by Morgan Stanley and T-Rowe Price, that together hold hundreds of millions of dollars’ worth of Flipkart stock, it seems that investors believe that the company is significantly overvalued.
As of now Flipkart’s valuation has halted at $5.54 Bn, almost a 63.5% drop from its all-time high of $15.2 Bn.
Earlier this month Softbank Group Corp also marked down close to $555 Mn in two of its Indian investments, cab hailing firm Ola and e-commerce marketplace Snapdeal, as per its six monthly earnings report, ending September 2016.
The above article was oiginall published at https://inc42.com. Please clck the link below to view original source. >> Morgan Stanley slashed the value of its Flipkart
Almost 5 months ago there was an announcement by Vanguard. ‘Another Flipkart markdown, Vanguard Investment slashes its share value by 25%’ ( Full Article pasted below)
In yet another markdown (sixth this year precisely), US-based Vanguard Investment has marked down its share value in Flipkart by 25%. The US-based mutual fund marked its share value in Flipkart at $102.6 at the end of March 2016. This was down from $136.87 in December 2015.
This latest markdown has pegged the valuation of Indian e-commerce behemoth at $11.4 billion. And yet again it is less than the $15 billion mark at which Flipkart had raised funds last time in July 2015. On the brighter side though, it is better than the $10Bn something it received durign the last markdown.
However, Vanguard Investment holds a very small share of the company which stands at less than $6 million. While Flipkart can find little solace in this fact, the regular markdowns by investors this year cannot be a good sign.
Just a theoretical exercise or something more?
It won’t be surprising if Flipkart remembers this year mainly as the year of markdowns among other issues which have plagued the company. With the latest by Vanguard Investment, the number has gone up to six in six months. It all started when Morgan Stanley managed mutual fund marked down its share value by 27% in February.
This was followed by another big investor T-Rowe Price which reduced its share value by 15%in April. More blows came in the month of May when Morgan Stanley once again marked down by 15.5 %. In the same month, two other funds, Fidelity and Valic further slashed downtheir share value by 20% in the company.
Flipkart, however, has refused to give any importance to these constant markdowns. Flipkart CEO Binny Bansal had called these markdowns “mostly a theoretical exercise by small investors”.
On questions on valuations, he had said,
From our perspective, valuation is when we raise money. When we raise money, our value will be clear in the market.
However, several media reports have suggested that Flipkart is finding it tough to raise money based on last funding valuation. And the company might have to go for a down round- i.e, raising capital at a lesser valuation than the previous round.
It had raised $700 million in July 2015 at a valuation of $15 billion- much to the skepticism of outside investors and industry experts. And that skepticism has perhaps become more evident given that Flipkart still seems to be far from profitability. Moreover, Amazon has slowly become a real threat now especially with its commitment of massive capital investment in India.
Keeping this in mind, one would think Flipkart needs to raise a fresh round of capital very soon. But apparently, that is not the case. Just yesterday, Flipkart Executive Chairman Sachin Bansal told reporters that the company was not looking to raise money.
There is always a constant effort in our company to improve operational efficiency and also growth in all aspects of business. We are well-funded for a long period of time and so we don’t need to look at it, said Sachin.
Originally published at. http://thetechportal.com/2016/07/01/flipkart-markdown-vanguard-investment/