Flipkart issues equity shares to Bennett Coleman after Rs 2.6 bn investment

Issuance of shares in lieu of media firm's Rs 2.6 billion investment in the ecommerce major in 2017

Walmart-backed Indian e-commerce giant Flipkart has issued 123,328 Class-B equity shares to media firm Bennett Coleman & Company Ltd (BCCL) in lieu of Rs 2.6 billion which, the latter had infused into the company in January 2017.

According to regulatory filings sourced from business intelligence platform Paper.vc, Flipkart said that it had received a warrant exercise letter from BCCL on August 18, and in accordance issued the equity to the company on August 20.

Sources close to the deal told Business Standard that the agreement was a private treaty deal, which in the media space has come to be known as an ‘ad-for-equity’. BCCL and even other large media houses in India have executed several such deals with private companies. BCCL owns media platforms such as Times of India, Economic Times and Times Now, among others.

The issuance of equity to BCCL comes days after Flipkart closed a deal with Walmart --- which saw the US retail giant investing $16 billion for a 77 per cent stake in the Indian retailer. The deal, which is the largest of its kind in the world, valued Flipkart at $20.8 billion.

In early 2017 when BCCL made the investment in Flipkart, the e-commerce giant’s valuation had taken a massive beating. From a peak of $15 billion at which the company had raised its previous round of funding, investors in the company had marked down Flipkart’s valuation to as low as $5.5 billion.

When the e-commerce firm finally raised $1.4 billion from Tencent, Microsoft and eBay in April 2017, its valuation had dropped to $11.6 billion. Since then, the company’s valuation was on a steady rise, and currently stands at the highest level it has ever been.

Apart from Flipkart, BCCL has made several such deals with large Indian internet companies as well as global firms. Ride-hailing behemoth Uber, and online education firm Coursera had also entered into a similar deal with the media giant earlier. A lot of BCCL’s investments in startups have been made through subsidiary Times Internet Ltd.