10:00 am - Saturday November 7, 2015

Flipkart to raise fresh funds at $10 billion valuation

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MUMBAI: India’s largest online commerce player Flipkart is in the market to raise anywhere between $500 million and $1 billion in a fresh financing round, valuing the company at an eye-popping $10 billion, people familiar with the matter told TOI.

A new investor, along with existing shareholders Tiger Global, South Africa’s Naspers, Yuri Milner’s DST Global, is expected to participate in the fund-raise, which will be the third for the Bangalore-based e-tailer this year.

Flipkart is already in the top tier of privately held internet ventures globally, comprising startup superstars like taxi-hailing smartphone app Uber, Airbnb and Dropbox, among others.
The new fund-raise will value Flipkart at 2.5 to 2.7 times its annualized revenue, which is in sync with Amazon’s valuation multiples till recently. The Jeff Bezos-led Amazon has lost a third of its market value in recent months as Wall Street started posing questions to the internet giant which has not tasted profits. Flipkart is expected to close the current financial year with a revenue run rate topping $4 billion.

The latest financing round could close in the next 45 days, valuing Flipkart closer to $11 billion. The Wall Street Journal first reported on November 7 that Flipkart’s latest fund-raise is likely to value the company at over $10 billion. With this, Flipkart would have raised around $2.5 billion in funding till date. Flipkart could not be reached for immediate comments.

Sources told TOI that the online retailer may raise $2 billion in capital, as it looks to thwart the growth of its rivals, over the next three years, a timeline by when the investors hope for a possible US listing at a valuation in excess of $25 billion. Tiger Global, the Wall Street investment firm, a fervent backer of Indian internet startups, is the largest stakeholder in Flipkart and is expected to pump in more dollars into the company.

In all, Tiger Global alone has invested about $700 million in Flipkart and could take its exposure to $1 billion, surpassing what it invested in social networking site Facebook. None of the existing investors are likely to sell shares though some of them may not participate in the new financing round.

Founded seven years ago as an online bookstore by Sachin and Binny Bansal (not related), Flipkart raised $1 billion at a $7-billion valuation in July this year, signalling the investor exuberance around India’s burgeoning consumer internet story. Just last month, Japan’s SoftBank pumped in $627 million in Delhi-based online retailer Snapdeal.

TOI reported in its October 7 edition that Flipkart has hit a $3 billion revenue run rate on the back of exclusive tie-ups with mobile handset makers Motorola and Xiaomi, and its growing market share in the fashion category post its acquisition of Myntra.

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