After seven years and an estimated $2 billion wagered, Tiger Global Management, the New York-based hedge fund, is weeks away from notching its first meaningful exit in India’s start-up market. Japanese media and Internet conglomerate SoftBank Group Corp.’s monster Vision Fund is picking up a reported 20% stake in Bengaluru-based e-commerce firm Flipkart for $2.6 billion. About $1.4 billion, Mint reported, will go into Flipkart’s coffers. The remainder will be used to buy stakes from some of Flipkart’s existing shareholders. Tiger Global, according to multiple media reports, stands to corner $800 million or more. That would easily make it the largest exit payout to a single investor in this market.

But it isn’t time to pop the bubbly yet. Not for Tiger Global. And certainly not for local venture capital firms, currently under siege for their dismal track records with delivering profits on past investments. A multi-bagger exit from Flipkart, India’s most valuable technology start-up, would alleviate some of that misery.

Flipkart is Tiger Global’s biggest and riskiest bet in India. Since 2010, it has pumped an estimated $1 billion into the company over several tranches, each time at a significantly higher valuation. The last time it invested, back in July 2015, leading a $700-million round, the firm’s post-money valuation soared to a reported $15.2 billion. It now owns an estimated 30-33% stake in the firm, making it the largest shareholder.

Lately though, owning a third of the e-commerce firm hasn’t been much of a trump card. A series of operational lapses saw Flipkart losing significant ground in the market through 2015 to Seattle-based e-commerce giant Amazon. The problems were compounded by global macroeconomic factors that cut the supply of global capital, mostly hot money from hedge funds and other non-traditional start-up investors. Those factors also affected Tiger Global and the hedge fund had to abruptly turn off the tap on start-up investments here. As Flipkart struggled to become operationally efficient and battle an unrelenting Amazon, it didn’t take long for its valuation to go south.

Tiger Global’s desperation with Flipkart’s falling fortunes became evident in January this year when Kalyan Krishnamurthy, a managing director at the hedge fund, replaced co-founder Binny Bansal as CEO. Krishnamurthy’s brief, according to several people familiar with the development, was simple— arrest further losses at the firm. Meanwhile, Tiger Global, chiefly Lee Fixel, who heads the hedge fund’s private equity and venture capital investments, got down to business of addressing the company’s other immediate problem—access to capital. Since the hedge fund couldn’t itself invest afresh, in April this year, it engineered a $1.4 billion investment into the company from Tencent Holdings, Microsoft Corp. and eBay Inc. As part of the deal, eBay’s flagging India operations would be merged with Flipkart.

The April fund infusion, however, also saw Flipkart’s post-money valuation plunge to $11.6 billion. Fixel had to find a buyer for at least some of Tiger Global’s stake before the valuation dived further. In a market deep in a downturn, that buyer could only be SoftBank. In May, it had amassed a massive $93 billion for its ambitious Vision Fund. At the time, it was also in the midst of reassessing its India bets and looking for other assets to back. One of the bets it was reassessing was Delhi-based e-commerce firm Snapdeal. Talks got underway on a complex deal—Snapdeal would merge with Flipkart and the all-stock merger would give SoftBank a stake in Flipkart. In addition, SoftBank would buy some of Tiger Global’s stake in the firm.

As we now know, the bid to merge Snapdeal has failed. But, SoftBank, apart from independently investing in Flipkart, is also buying a portion of Tiger Global’s stake along with that of other investors, including venture capital firm Accel. It is almost entirely to Tiger Global’s credit that Flipkart now counts SoftBank as an investor despite Snapdeal falling through. “Tiger was very involved, leading the discussions on how things could work… liaising with the other investors… Lee (Fixel) brings a lot of calmness to the table," says a person who was involved in putting together the deal. The formalities of the secondary transaction, he says, should be through by the end of October. Once completed, SoftBank will become Flipkart’s largest shareholder.

For Tiger Global, however, there’s still some way to go before it can claim success for the Flipkart bet. Even after selling some of its stake, it will remain the second-largest shareholder in the company. Some media reports speculate that it will continue to hold an 18% stake. The reported $800 million-plus that it expects to harvest from the partial stake sale will just about cover its principal investment. In order to turn in decent profits, it will have to ensure two things. One, have Flipkart hold its valuation at a reasonable level. Two, find buyers willing to pay for its remaining stake at that valuation.

Turning in more than decent profits from Flipkart is imperative for Tiger Global especially in the context of how its other start-up investments here have performed. Apart from Flipkart, the hedge fund has investments in at least 40 other start-ups, many of which have gone belly up in the past 18-odd months. It has had to employ a combination of all-stock mergers, fire sales and write-offs to consolidate the portfolio, built in an era of unrealistic valuations. Despite its aggressive, even reckless, dealmaking and early bets across the spectrum of technology start-ups in this market, the hedge fund is yet to earn its stripes as a venture capital investor. While there is some speculation that the partial exit from Flipkart will bring the hedge fund back into the market—it has not made any new investments since the end of 2015—that would be far from desirable given the valuation bubble it spawned in the past with its dealmaking.

“I would be surprised if they rushed back into the market…Flipkart still has to deliver for them. When I met Lee (Fixel) recently he was pretty clear about not playing a big role in future funding rounds even in existing portfolio companies," says a venture capitalist in Mumbai who shares a common start-up investment with Tiger Global.

A reserved Tiger Global, more importantly, is in the best interest of India’s venture capital industry. Encouraged by the rush of capital from investors such as Tiger Global, most local venture capital firms allowed themselves to be swept up in the gold rush for technology start-ups, chiefly in the consumer Internet sector. Many of those investments have gone sour in the past 18 months. They equally need Flipkart to deliver supernormal returns for Tiger Global. More than a few of those firms have their fortunes tied to the hedge fund as co-investors in leading start-ups, including unicorns such as Ola, Quikr and Shopclues. With the SoftBank deal, there’s no taking away that Tiger Global has pulled a rabbit out of its hat. How it plays the next round though will be much more interesting to watch.

Snigdha Sengupta is a consulting writer with Mint. She contributes stories on venture capital and private equity.

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