After Morgan Stanley & T Rowe Price, more investors mark down Flipkart valuation

Valic Co 1 and Fidelity Rutland Square Trust II have marked down the value of Flipkart shares by 29.4% and 21% respectively

More global investors in India's largest e-commerce marketplace Flipkart are acknowledging the drop in the company's value, which peaked at $15.2 billion in July last year.

Two US mutual funds — Valic Co 1 and Fidelity Rutland Square Trust II — who have minority stakes in Flipkart have marked down the value of their stocks in the company, reflecting the broader trend among global investors to be realistic of their investments in emerging firms. Both firms have marked down their valuation the second time since July, when they participated in the $700 million fund raising by Flipkart when it was valued highest.

 

In separate filings with the US Securities and Exchange Commission (SEC), Valic Co 1 reduced the value of its stake in Flipkart by 29.4 per cent from $139 a share in the August quarter to $98 in the quarter that ended February. Fidelity Rutland Square Trust II marked down the value of the company by 21.1 per cent from $103.97 at the end of November to $82 for the three month period that ended February.

The Economic Times newspaper first reported the news of Valic Co 1 and Fidelity Rutland Square Trust II on its website on Wednesday.

Both firms are following in the footsteps of mutual funds Morgan Stanley and T Rowe Price, which had marked down the value of their stake in Flipkart by 27 per cent and 15 per cent respectively. The latest exercise reinforces the fact that Flipkart's value has eroded in the past few months from $15.2 billion, down to a little over $9 billion depending on who you ask.

Last week, Sachin Bansal, executive chairman of Flipkart, said that he did not read too much into the drop in valuation stating the marked downs by investors were theoretical and not based on transactions.

"I do not think anyone's valuation has changed just because somebody or small shareholders of these companies have changed their opinion. I do not worry too much about that," Bansal said at the TiE summit in Delhi.

Eyeing the growing competition from US e-commerce giant Amazon and increasing investments from China's Alibaba Group in India, investors have started becoming cautious of Flipkart's ability to remain in the lead. Flipkart's plans to raise fresh funds to fuel investment and remain in the lead has been stuck due to the drop in valuation.