Flipkart to sell stake to Bennett, Coleman & Co

Estimates peg deal at Rs 500 crore; arrangement will entail a combo of cash and ads

Bengaluru-based e-commerce player Flipkart is in talks to sell an undisclosed percentage of stake to Bennett, Coleman and Co Ltd (BCCL), which owns a number of media outlets including The Times of India and The Economic Times, according to media reports. The group already owns a minor stake in Kunal Bahl-led online marketplace Snapdeal.

The details of the minority stake sale are not known, but estimates pegged the deal at Rs 500 crore.

According to reports, the deal would entail a combination of cash and advertisements. Under the proposed deal, Flipkart’s various advertisements would be featured in BCCL’s properties. The Sachin Bansal and Binny Bansal-led company did not respond to queries sent.

“BCCL had earlier bought stakes in other start-ups in similar deals. Snapdeal is one such .

This sale is small to make any sort of dent in the falling valuation of Flipkart.

If this sale fructifies, the association would help Flipkart get access to one of the biggest media houses in the country,” said a senior analyst with an international consultancy firm on condition of anonymity. The media major has investments in a lot many companies including global taxi-hailing app Uber, real estate listings portal Magicbricks.com, among others.

The going has been tough for Flipkart in the past few months after a series of markdowns by its investors. In the last week of May, Morgan Stanley Mutual Fund Trust, a mutual fund investor in Flipkart Ltd, lowered its estimate of the online retailer’s valuation by 15.5 percent for the second successive quarter in a row.

In February this year, Morgan Stanley marked down its stake in Flipkart to $103.97 a share, 27 per cent lower than the price at which the shares of Flipkart were bought during the last fund-raising round. This reduced the value of India's biggest online retailer to $11 billion. Subsequently, mutual fund house T Rowe Price marked down the value of its stake in Flipkart by 15 per cent.

Its other mutual fund investors - Fidelity Rutland Square Trust II and VALIC Co - had marked down the value of their holdings in Flipkart by 20 per cent some time ago. The Flipkart co-founders have, however, consistently claimed that markdowns are notional.

Sivakumar Sundaram, chief executive, Brand Capital (Times of India, BCCL), was unavailable for comment.