From Valuation Markdown To Fundraise: BCCL Bets $38.7 Mn On Flipkart

At a time marked with severe slashes to its valuation and looming questions of profitability and acquisition, India’s number one favourite startup Flipkart has reportedly raised about $38.7 Mn (INR 260 Cr) from media giant Bennett, Coleman and Co. Ltd (BCCL). Mint reported that the funds were raised by selling a small stake to BCCL, for cash along with advertising space, as per regulatory filings.

In June 2016, it was reported that Flipkart was in talks to sell a small stake to BCCL in a $75 Mn (INR 500 Cr) deal. The deal was reported to be funded partly by cash and partly by ads.

Under the terms of the proposed deal, Flipkart will issue shares to BCCL in return for cash and ads over several years in its media properties – such as The Times of India and The Economic Times newspapers, ET Now ,and Times Now channels. BCCL had earlier inked a similar deal with Snapdeal (Jasper Infotech Pvt. Ltd) in February 2016.

The report also states that BCCL has made a private placement offer of about $38.7 Mn (INR 260 Cr) to purchase a warrant for Class B equity shares in Flipkart. As of now, the media giant has invested about $3.8 Mn (INR 26 Cr) in Flipkart, the remaining amount will be paid when the warrant is converted into equity shares.

No More Rocky Times For Flipkart?

This move comes at a time when the homegrown ecommerce biggie’s valuation took a beating in 2016 and had a tougher 2017. In January 2017, US-based mutual fund investor T. Rowe Price reduced Flipkart’s valuation by another 4% to about $9.9 Bn.T. Rowe Price had invested about $100 Mn in Flipkart in December 2014, when the firm raised $700 Mn funding. In April 2016, it marked down its shares in by 15%. This markdown came after Morgan Stanley slashed the value of its Flipkart shares by 38.2%.

Earlier this week it was announced that Flipkart is consolidating the offerings of its logistics arm– Ekart and it has suspended Ekart’s customer-to-customer (C2C) courier operations. The report also stated that it has ceased its hyperlocal delivery services in Bengaluru that were launched in November 2016.

Flipkart entered 2017 with a major reshuffle in its organisation structure. Co-founder Binny Bansal stepped down from the position of company CEO. Kalyan Krishnamurthy, who was heading the Category Design Organisation, became the new CEO of Flipkart. However, just a day after these leadership changes were announced, three of the top level executives reportedly resigned from the company.