Morgan Stanley yet again marks down Flipkart stakes

Seems like Morgan Stanley has become a regular menace for homegrown eCommerce portal Flipkart.

Seems like Morgan Stanley has become a regular menace for homegrown eCommerce portal Flipkart. The American finance services firm that also holds a significant amout of stake in Flipkart has, for the second time, marked down its stake value in the company by 15.5 per cent.

A Morgan Stanley managed mutual fund has dipped down the value of their Flipkart shares at $87.9 per share from $103.97 per share as of December 2015 and down 38.2 per cent from $142.2 per share by June 2015.

This is the second successive cutdown of share by the finance company. Earlier, in the previous quarter it marketdown the share of Flipkart by a massive 27 per cent. The recent markdown pegs Flipkart's valuation at $9.39 billion, as compared to the $15.2 billion when it last raised capital in July 2015.

Morgan Stanley is not the first one to hit the eCommerce firm in terms of valuation dip. It follows a series of markdowns by other mutual funds that own Flipkart shares. Two of Flipkart's mutual fund investors Fidelity and Valic had further marked down the value of their holdings in the company by 20 per cent earlier this month while a T Rowe Price-managed mutual fund had marked down their holdings by 15 per cent last month. 

Morgan Stanley had picked up shares in Flipkart as a part of its series D round of funding in 2013, when the Bengaluru-based online marketplace nabbed $360 million funding in two installments. It had also picked up additional shares when Flipkart raised a massive $1 billion investment in August 2014. 

When asked to comment on these regular valuation markdowns by a media firm, Flipkart’s CEO and Co-Founder Binny Bansal touted it as nothing but theoretical exercise by small investors.

These markdowns however comes at a time when Indian eCommerce landscape is radically facing severe hiccups in raising funds, after witnessing whopping funding levels last year. 

Flipkart has been looking to raise a new round of funding since late 2015 to maintain its leadership position in India against rival Amazon which has infused at least Rs 6,700 cr investment since January 2015 in its Indian operations.

 Flipkart co-founder and executive chairman Sachin Bansal had also hinted at a tougher financial climate earlier this month, but also attributed it to regular financial cycles. 

Binny Bansal, while taking to a media firm said that they have also now shifted focus towards customer loyalty, instead of obsessing about gross merchandise value.

Last month, Snapdeal CEO Kunal Bahl said that the company will also no longer depend upon gross merchandise value and rather concentrate on adding and retaining high-quality users, who are essentially frequent shoppers purchasing high-margin products.

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