Respite For Flipkart: US Fund Valic Marks Up Its Valuation By 10%

Almost a fortnight after mutual fund investor Fidelity Rutland Square Trust II fund marked-up the valuation of its Flipkart shares marginally by nearly 3%,  another US fund Valic has marked up the value of its shares in Flipkart by 10%, reports ET. For the quarter ended May, Valic now values Flipkart’s shares at $108.04 as against $98.19 in the previous quarter, as per a regulatory filing with the US Securities and Exchange Commission (SEC).

This markup now puts Flipkart’s valuation at around $11.55 Bn, as compared to $10.5 Bn earlier. This is however still down from Flipkart’s peak valuation of $15.2 Bn when it last raised funds in July 2015. Valic holds a very small amount of Flipkart’s stock. It had picked up shares in Flipkart as a part of its series D round of funding in 2013, when Flipkart had raised $360 Mn in two tranches. Prior to this markup, however, Valic had marked down the value of its holdings in the ecommerce giant for two consecutive quarters by 20.2% and 12% respectively.

This markup comes at a time when Flipkart is taking many steps to fix its loss-making business model. Towards this, Flipkart has made an effort to ramp up its revenues and increased the commission it charges the sellers on its marketplace by 5%-6% across several segments such as fashion and mobile accessories. Last month it also decided to let go of underperforming employees in a bid to have a leaner organisation structure, and make better utilisation of its cash resources.

Its latest acquisition of rival Jabong  a fortnight ago is also a step in this direction to strengthen its hold over the fashion category, which is the second largest segment for online retailers after smartphones and electronics. The move is expected to help it score an edge over Amazon, which is still getting it right. Nevertheless, the threat from Amazon continues with founder Jeff Bezos committing an additional $3 Bn investment to its India unit, taking the total commitment to $5 Bn.

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