Flipkart in talks to raise up to $1 billion
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Bengaluru/New Delhi: India’s largest e-commerce firm Flipkart is in advanced talks to raise between $700 million and $1 billion in fresh funds, barely four months after the company received a record $1 billion, according to three people familiar with the matter.
Flipkart is likely to receive a so-called pre-money valuation of $11-12 billion in the latest round, said the three people, all of whom spoke on condition of anonymity because the discussions aren’t public. Pre-money refers to the value of the company excluding the cash from the latest round. Flipkart was valued at $6 billion when it received $1 billion from investors in July.
At least three new investors will participate in the latest round, which is expected to be closed within the next 45 days, two of the three people cited above said. Qatar Investment Authority, the sovereign wealth fund of Qatar, is one of the new investors Flipkart is in discussions with, the two people said.
Flipkart declined to comment. The Qatar Investment Authority, which has also invested in the US-based cab booking service Uber, didn’t respond to an email seeking comment. Mint couldn’t verify the names of the other new investors Flipkart is talking to.
More than $3 billion has already been invested in e-commerce this year, after a two-year period when most venture capital firms steered clear of online retailers. Flipkart and its rivals— Snapdeal and Amazon India—are topping up their war chests, allowing them the flexibility to buy attractive start-ups, offer deeper discounts to buyers and increase their logistics reach for a bigger slice of the fast-growing e-commerce market in Asia’s third biggest economy.
The latest fund infusion into Flipkart will give the company more fuel to pursue its aggressive market share acquisition strategy. The addition of deep-pocketed new investors also offers external validation to the company’s largest investors Tiger Global and Naspers of their large bets on Flipkart.
Until now, Flipkart has received nearly $1.8 billion in capital from more than 10 investors (Flipkart has a few other investors because of stock-based mergers). Some of the existing investors, including Tiger Global Management and Naspers are likely to participate in the latest round, though these two investors won’t be coughing up a large part of the new funds unlike the July round, the three people cited above said. Other investors in Flipkart include Government of Singapore Investment Corp., the city-state’s sovereign wealth fund, DST Global, Accel Partners, Dragoneer Investment Group, Iconiq Capital and Vulcan Capital.
Flipkart said on 29 July that it raised $1 billion, roughly half of which together came from Tiger Global and Naspers, in a financing round that was the largest-ever by an Indian start-up and among the largest-ever by any Internet start-up globally.
Friends Sachin Bansal and Binny Bansal started Flipkart in 2007 as an online book seller, modelling the site on their former employer Amazon.com Inc., the world’s largest online retailer. Over time, Flipkart added electronics, apparel and other products on its site and quickly became the country’s largest and most valuable e-commerce firm.
Flipkart is currently among the most sought-after private companies globally and is considered by some analysts as the next big online retail business after China’s Alibaba, which went public earlier this year and is now valued at more than $250 billion.
Flipkart Pvt. 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.
The firm is involved in a bruising marketshare battle with role model Amazon as well as local rival Snapdeal, which raised $627 million from Japan’s SoftBank Group in October. Earlier this year, Amazon chief executive Jeff Bezos promised to invest $2 billion in India over time.