A mutual fund of the global brokerage firm Morgan Stanley has marked down its stake in the Indian e-commerce behemoth Flipkart by 15.5%. This is Flipkart’s fifth markdown.
The Morgan Stanley Institutional Fund Trust estimates each Flipkart share is worth $87.86 at the end of March 2016 compared with $103.97 three months earlier, according to the fund’s filings to the US Securities and Exchange Commission.
This is the second time that Morgan Stanley fund has marked down Flipkart. The first came in February this year, where Morgan Stanley had marked down its stake in the Indian e-commerce by 27 percent.
Importantly, the markdown comes after Flipkart’s claimed that it’s valued $15.2 billion earlier this year.
Three other investors in Flipkart have reduced the value of their stake in the Indian company over the past two months. T. Rowe Price slashed the holding value of its investment in Flipkart by 15.1% in its report for the quarter through March 2016.
According to filings with the Securities and Exchange Commission, the mutual fund managed by Fidelity Investments lowered the value of Flipkart shares it owns by almost 40% to $82 apiece as of 29 February 2016 from $135.8 in August last year. Valic marked down the value of its investment in Flipkart by 29% to $98.19 a share from $139 apiece.
Flipkart CEO Binny Bansal, however, has dismissed concerns related to these markdowns and said it was a theoretical exercise by small investors. He insisted that markdowns come into play when a company goes for a fresh round of fundraising and that Flipkart was not in desperate need for cash.
Morgan Stanley, Fidelity and Valic first acquired Flipkart shares in 2013 during the company’s Series D round. Morgan Stanley invested again in 2014 and Valic in March 2015. To be sure, the value of their investments has risen since they bought shares of Flipkart.
T. Rowe Price initially invested in Flipkart in December 2014 as part of a private equity funding round where Flipkart raised $700 million from a host of investors including Steadview Capital and Qatar Investment Authority among others. It later invested more in March 2015.
After that funding galore in the initial years, things in the investment domain have started to slow down from past few years — specially Q4’15. Investors are now looking for a sustainable business model and profitability rather than just initial disruption through technology.
Flipkart also counts Tiger Global Management, Naspers, Accel Partners, Iconiq Capital, GIC, DST Global and Sofina Societe, among others, as investors.