Fidelity marks down India's Flipkart
A mutual fund managed by Fidelity has cut the valuation of its shares in India e-commerce giant Flipkart – which faces a concerted challenge from Amazon – by 36.1%, falling in line with a Morgan Stanley valuation issued last December.
The semi-annual report for Fidelity’s Strategic Advisers Value Fund disclosed that Flipkart was worth $52.13 per share in November, down from $81.55 three months earlier. In August 2015, the fund valued Flipkart at $135.8 per share. Morgan Stanley also cut its valuation to $52.13 in September from $84.29 in June. Both funds have marked down Flipkart in four consecutive quarters.
These mutual funds do not disclose their exact methods for calculating the valuations of portfolio companies. They are believed to rely on a mix of the companies' financial information, market values of listed firms in the same industry, and the previous share price.
Fidelity said it invested in Flipkart in October 2013. That month the company announced it had raised an additional $160 million in Series E funding from investors including Sofina, Morgan Stanley, Dragoneer Investment Group, Vulcan Capital and Tiger Global Management. This took the overall size of the round to $360 million.
When the first tranche of the Series E was completed, Flipkart’s valuation was said to be $1.5 billion. This rose to approximately $7 billion in mid-2014 when Tiger Global and Naspers led a $1 billion round for the company, and then $15 billion in mid-2015 when Flipkart reportedly raised $700 million in funding from existing investors. There have been no equity funding rounds since then.
Founded in 2007, Flipkart has 100 million registered users, 10 million daily page visits and 100,000 sellers, enabling eight million shipments per month via a logistics infrastructure that includes 21 warehouses. It is a marketplace for products ranging from consumer electronics to clothes and footwear.
The company has raised multiple rounds of funding – more than $3 billion in total, according to Crunchbase – from the investors mentioned above, as well as the likes of Accel Partners, DST Global, Naspers, Iconiq Capital, GIC Private, Baillie Gifford, Steadview Capital and T. Rowe Price. Several groups have disclosed markdowns of Flipkart, with T. Rowe Price valuing the business at $96.29 per share as of September, down from $142.24 in December 2015.
Flipkart has seen a string of departures over the past year, including its chief product officer, chief technology officer, chief business officer and CFO, and two more senior exits were reported this week. Earlier this month, Kalyan Krishnamurthy was appointed CEO. He was previously a managing director at Tiger Global, which is said to own close to one third of the company.
Flipkart is not the only Indian internet company to see a valuation write-down. In November, SoftBank marked down the value of part of its investment portfolio, including holdings in ride-hailing app Ola and its e-commerce counterpart Snapdeal.
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