Indian e-commerce major, already locked in a battle with Amazon to tap into the burgeoning Indian online market, has received a glancing blow, with international investor Morgan Stanley cutting the value of the shares in a mutual fund that it manages, thus valuing the company at $5.5 billion. This is the fourth time this year that such a cut has been carried out, and is by far the most sizeable correction for Flipkart, which last raised a financing round in July 2015 when its paper valuation stood at $15.2 billion. This amounts to a remarkable 38.2% markdown in shares.
According to statutory regulatory filings to the Securities and Exchange Commission, or the SEC of the United States, Morgan Stanley, which holds a stake of around 1.5% through its entities in the e-commerce major, reduced the value of its holding by 38%, pegging the company’s shares at $52.13 each as of September 2016. ‘Morgan Stanley Mutual Fund Trust’ currently holds 1,969 shares in Flipkart Online Services, collectively valued at $102,644.Flipkart’s market valuation was a respectable $15.2 billion when its capital was raised last in July 2016. This new cut marks the fourth market valuation revision or markdown by Morgan Stanley. In February this year, it had cut its valuation of shares by 23.4 percent and in May had slashed its stake by 15.5 percent. The last major markdown was in June when Morgan Stanley reduced Flipkart’s valuation by 4.1 percent. At that time, the company’s value was pegged at $9 billion.Morgan Stanley first invested in Flipkart in 2013.
Two other investors in Flipkart, Valic and Fidelity, had also marked down their valuation in Flipkart, earlier this month. Other major investors such as Vanguard and Fidelity Rutland Square Trust II have also lowered their values in Flipkart shares, at least once. Flipkart’s other investors include Tiger Global Management, Naspers, Accel Partners, Iconiq Capital and DST Capital.
The recent markdowns will possibly affect the company’s fund-raising plans, as we reported earlier. However, Flipkart has continued denying reports of seeking fresh funding in the immediate future. It was reported that retail giant Walmart was planning to invest in the Indian major, but no further confirmation has yet been received. This latest development might prove to be particularly perilous for Flipkart in the long run, as it is vying with Amazon, led by Jeff Bezos, to harness the domestic market. Amazon reportedlyhas invested huge sums in overcoming their Indian rival.
Last month,Flipkart Chief Financial Officer Sanjay Baweja resigned from the company, but will continue to be with the company until the end of December this year. Interestingly, since Binny Bansal took over the reins as CEO in January this year, a lot of top-level management exits have become common at the Indian e-commerce major.