After Flipkart’s recent markdown and Zomato’s slashed valuation, it’s Amazon’s turn now to experience some upheaval. Tiger Global Management, which happens to be the largest investor in rival Flipkart, has reduced its stake in Amazon by nearly 67% in the March ended-quarter. A report in ET stated that the hedge fund has cut its exposure to 1.04 Mn shares worth $619 Mn as of March 31, down from 3.19 Mn shares worth $2.16 Bn as of December 31, as per regulatory filings.
Interestingly, Amazon was Tiger Global’s second-largest public holding, after it had picked up 2.44 million shares for about $1 Bn last year through its public equity (hedge fund) business. The hedge fund however lost 22% in the first three months of this year, as Amazon shares dipped by 12% during the period. However, since then, Amazon shares have risen significantly on the back of a strong financial results and record profit in March ended quarter. Consequently, the stock touched its all-time high price of $720.6 on May 12.
Additionally, Tiger has also reduced its stake in Chinese e-tailer JD.com by nearly 25% and entirely dissolved its minority stake in Alibaba. While the investment in Amazon was routed through its public equity fund, that in Flipkart happens to be through its private equity funds. The firm has participated in every fund-raising round of Flipkart’s, pumping in over $1 Bn till date. It holds 28% stake in the Indian ecommerce giant.
The timing of Tiger’s reduced exposure in Amazon comes at a time when rival Flipkart is facing a series of markdowns from its mutual fund investors in the last couple of months. Fidelity and Valic which further marked down the value of their holdings in the company by nearly 20% in the beginning of this month, had earlier marked down their holdings in the company by 24% and 12% respectively in the previous quarter. Valic and Fidelity 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, in February 2016, Morgan Stanley marked down Flipkart shares by 27%. Later in April 2016, a US-based mutual fund managed by T.Rowe Price marked down its shares in Flipkart by 15%. T Rowe Price had invested about $100 Mn in Flipkart in December 2014, when the firm raised $700 Mn funding. The latest markdown now pegs Flipkart’s valuation up to $10.7 Bn as compared to $15.2 Bn when it last raised capital in July 2015.
Meanwhile, in order to grab the largest share in the ecommerce marketplace in India, Amazon India has almost doubled its authorised capital to $2.4 Bn, exceeding its capital commitment of $2 Bn, that it committed in July 2014.