VC-backed Indian e-commerce giant Flipkart acquires Myntra
VC-backed Indian online shopping company Flipkart has acquired fashion retailer Myntra as competition intensifies in the country's e-commerce market.
Financial details were not disclosed, but it is understood that the deal - which was confirmed yesterday following weeks of speculation - is valued at around $300 million. Flipkart will buy 100% of Myntra in the largest ever Indian e-commerce transaction to date.
The acquisition gives Flipkart a stronger grip on the market as it faces competition from US giant Amazon, which launched in India last year and is now marketing aggressively. Domestic rivals such as Snapdeal, which raised $100 million in a fresh round of funding this week, also pose a threat.
Bangalore-based Myntra launched in 2007. It sells clothes and accessories from international labels in addition to holding its own in-house brands.
The business shares two VC investors with Flipkart: Accel Partners and Tiger Global Management, both of which took part in a $50 million round of funding for Myntra led by Premji Invest in February.
The company was seeded by Erasmic Fund and Mumbai Angels in 2007. It received $5 million from IndoUS Advisors, IDG Ventures and Accel the following year. IndoUS and IDG returned in 2011 to invest another $14 million alongside Tiger Global. In early 2012, Tiger Global put in a further $20 million and then $25 million more six months later alongside Accel.
Myntra's main rival in the online fashion retail space is Jabong which secured around $27.5 million from UK development finance institution CDC Group in February.
Flipkart sells a broad selection of items from books to electronics was seen as relatively weak in the fashion and apparel vertical. The company has so far raised around $540 million from VC investors, including a $360 million Series E investment that closed with its second tranche last October.
The plan is for Flipkart and Myntra to operate separately while both leverage Flipkart's technology platform and logistics network and Myntra's knowledge of the fashion business.
According to a September 2013 report by Technopak Advisors, the Indian e-commerce market is worth $1 billion, or 0.2% of the overall retail market. It is projected to reach $56 billion, or 6.5%, by 2023.
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