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Mutual Fund Investor Valic Marks Down Flipkart’s Valuation

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Mutual Fund Investor Valic Marks Down Flipkart Valuation ,Mutual Fund Investor Valic,Startup Stories,Inspirational Stories 2017,Valic Flipkart Valuation,India top online retailer,Flipkart Valuation 2017,India Large Consumer Internet Startups,Latest Business News 2017

Valic Co., the mutual fund investor based in America, has marked down the valuation of the ecommerce firm Flipkart to $ 7.9 billion from $ 11 billion. The markdown comes as a surprise because the ecommerce firm recently raised $ 3 billion from SoftBank, Tencent Holdings, Microsoft and eBay.

The trimming, according to sources, is an indication that some of the smaller investors of Flipkart are still divided over its previous valuation. Flipkart’s valuation was decreased to around $ 8.5 billion in the previous quarter by Valic and each share was priced at $ 88.11 for the quarter ending on 31 August 2017.

In the past 12 months, Flipkart has consolidated its position as India’s top online retailer. However, various fund investors such as Morgan Stanley, Fidelity Investments, Valic and Vanguard Group Inc., were still divided over its valuation. The latest fundraising round also saw a decrease in the valuation from its peak valuation of $ 15 billion. So far, Fidelity and Morgan Stanley have slashed Flipkart’s valuation five consecutive times. In January this year, US based mutual fund investor T. Rowe Price also reduced Flipkart’s valuation by 4% to about $ 9.9 billion.

However, Flipkart founders Sachin Bansal and Binny Bansal repeatedly dismissed these markdowns, calling them “theoretical exercises.” Speaking about the markdowns in an interview in December 2016, Sachin Bansal said, “We are not a public company, so we don’t release our numbers publicly. Any investor who has an opinion on our valuation outside, including who are already invested in us, they are doing it (markdowns) based on some public information. It’s a very uninformed opinion of somebody. So, I think it’s a theoretical exercise.”

While the markdown might not significantly damage Flipkart’s image much, the decrease in valuation suggests that some investors still feel that most of India’s large consumer internet startups are overvalued. Amazon and Flipkart have been engaged in a  head to head battle for the prime market position in India’s ecommerce space, which is expected touch $ 200 billion mark by 2027.

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