Flipkart set to raise up to $800 million

Funding that may value firm at $15 billion is likely to be led by existing investors including Tiger Global


Photo: Bloomberg
Photo: Bloomberg

Bengaluru/New Delhi: Flipkart Ltd is in advanced talks to raise $600-800 million in fresh capital, potentially valuing India’s biggest online retailer at as much as $15 billion.

The latest fund-raising is likely to be led by existing investors, including US-based venture firm Tiger Global Management and Qatar Investment Authority, three people familiar with the matter said. At least one new investor may also put in money in the current round, the people said, on condition of anonymity as the talks aren’t public.

Flipkart’s pre-money valuation may increase to $14-15 billion in the latest round, the people cited above said. Pre-money refers to the value of the company excluding the cash from the latest round. Flipkart was valued at nearly $11.5 billion when it received $700 million from investors in December. Flipkart didn’t respond to an email seeking comment.

Flipkart, founded by former Amazon Inc. executives Sachin Bansal and Binny Bansal in 2007, is building a war chest to gain a greater share of India’s retail e-commerce market that is estimated to grow 70% to $6 billion this year. Although Flipkart is now well-capitalized despite burning massive amounts of cash on advertising, discounts and hiring, it continues to raise capital to build itself a vast financial cushion ahead of an expected initial public offering within the next 18 months and to stave off challenges from rivals including the Indian unit of Amazon and Softbank Group-backed Snapdeal.

If the latest round goes through, Flipkart, which is backed by more than 15 institutional investors, venture capital firms and hedge funds including Naspers, Accel Partners, Steadview Capital, DST Global and GIC, would have raised more than $2.5 billion since last May alone.

The Bengaluru-based company is currently among the most sought-after private companies globally and is considered by some analysts as the next big online business after China’s Alibaba Group, which went public last year and is valued at more than $210 billion despite a recent slump in its stock price.

“Currently, there’s massive interest in Flipkart and in start-ups generally. Money is very easily available. But this isn’t going to last long, so Flipkart wants to ensure that even if things turn sour, they have enough in the bank to last them a long time,” one of the three people cited above said.

Given its current status, Flipkart is choosing new backers selectively, demanding exclusivity from potential investors and forcing them to enter non-compete agreements before they decide to put money in the online retailer, Mint reported on 25 March. The latest round is, therefore, being led by existing investors unlike its previous round in December, when five new investors entered Flipkart.

Flipkart’s largest rival Snapdeal is also in talks to raise its next round of funds. Snapdeal received $627 million from Japan’s SoftBank Group in November.

Flipkart Ltd, Flipkart’s holding entity registered in Singapore, posted a loss of Rs.644.37 crore on revenue of Rs.1,163.1 crore in 2012-13, according to documents filed with the Singapore government. The firm is yet to file its latest financial results.

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