Flipkart India's largest e-tailer which is in the midst of a third
round of fund-raising this year has received an initial investment of
$180 million led by Hong Kong-based investment firm Steadview Capital,
according to two people directly involved in the deal."Steadview has committed $100 million of the $180 million and as the subsequent tranches close, more new investors will come in," said one source.
This latest deal, which when complete could bring in about $700 million in fresh funding, values the Bengalurubased firm at about $11 billion (Rs 69,000 crore) making it worth more than some of India's largest consumer companies. While Godrej Consumer is estimated to be worth Rs 31,000 crore, Dabur India is valued at about Rs 41,000 crore.
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The sources also told ET that the current investment round could see a few of the existing investors cash out from the seven-year-old company in what is called a secondary sale.
Steadview, an India-focused alternative asset management firm, did not respond to email queries on the development while a spokeswoman for Flipkart declined comment.
Over the past couple of months speculation has been rife over Flipkart's fundraising plans, as the e-tailer soaks up cash to stay ahead in India's fiercely competitive ecommerce market that, according to Nomura, is estimated to grow to $43 billion by 2018.
Flipkart is now worth nearly half of India's fourth-largest IT services firm Wipro, which has a market capitalisation of Rs 1.34 lakh crore, and nearly seven times the mid-sized IT services firm MindTree that is valued at Rs 10,000 crore.
In May, Flipkart received $210 million led by Russian billionaire Yuri Milner's DST Global and in July it raised a mammoth $1 billion led by existing investors Tiger Global and South Africa's media group Naspers. The July fund-raising valued the company at $7 billion, a first for an Indian Internet firm.
This latest round, when complete, will again see contributions from all existing investors including DST Global, Naspers and Tiger Global Management. Multiple sources have told ET that Flipkart is being very choosy about the new investors it will welcome on board.
While Flipkart has raised a total of $1.2 billion so far this year, rival Snapdeal received $627 million from Japan's Soft-Bank in October. Amazon founder Jeff Bezos has committed $2 billion to grow his company's Indian operations.
For Steadview, which has this year picked up stakes in furniture e-tailer Urban Ladder and taxi aggregator Olacabs, this will be the first investment in an Indian online retail firm.
In recent weeks, India's ecommerce sector has been on fire, as the top three contenders vied with each other to offer deep discounts to customers in the year's biggest online sales during the Diwali season. The sale season also saw a lot of backlash from customers who were aggrieved at the level of service.
The companies are now expected to increase the reach of their logistics services and invest in improving back-end technology support. "Flipkart will (continue) to primarily invest cash for discounting and upgrading technology," said one person, who works with the company at a strategic level.
Flipkart, which is moving fast to launch a range of private label brands in electronics, fashion and accessories, is widely expected to launch furniture and packaged food by early 2015.
While Amazon India is already present in gourmet and specialty foods categories, it is yet to start selling furniture. Delhi-based Snapdeal, meanwhile, has a presence in both categories.
"India is about to experience an Internet boom like the world hasn't seen-with more than 500 million people coming online over the next 3-4 years," said Vivek Wadhwa, a fellow at Stanford Law School and a director of research at Duke University. "Flipkart has built a powerful brand and distribution network. It could be transacting business in hundreds of crores of rupees soon."
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