Ecommerce firm Flipkart is in talks to sell a small stake to Bennett, Coleman and Co. Ltd (BCCL) in a $75 Mn (INR 500 Cr) deal.
The deal is reported to be funded partly by cash and partly by ads, reported Livemint.
Under 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 and ET Now and Times Now channels.
Recovering from the recent markdown in Flipkart’s stake by its investors, a $75Mn deal would make a 0.5% stake in its presumed $15 Bn valuation in July 2015.
In May 2016, for the second time in a row and in a successive quarter, Morgan Stanley Mutual Fund Trust, lowered the value of its shares in Flipkart by 15.5%. Signifying that Morgan Stanley valued Flipkart at $9.39 Bn.
Previously in February, the fund had marked down Flipkart shares by 27%. Morgan Stanley’s fund had first invested in the ecommerce marketplace when it raised $160 Mn in October 2013.
This markdown pegged Flipkart’s valuation up to $10.7 Bn as compared to $15.2 Bn when it last raised capital in July 2015. This markdown was preceded by another of its investor -US-based mutual fund managed by T.Rowe Price –marking down its shares in the ecommerce giant by 15%.
The proposed Flipkart-BCCL deal is often referred as private treaty deal. First introduced by BCCL in 2004 to build a large portfolio of holdings, these deals were considered controversial, as they implied positive coverage for the other party.
BCCL inked a similar deal with Snapdeal (Jasper Infotech Pvt. Ltd) in February. It also has investments in a large number of startups such as cab-hailing service Uber, services provider Haptik and education startup Coursera. BCCL also owns real estate listings site magicbricks.com and digital music startup Gaana.
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