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Flipkart now valued at $11 bn after raising another $700 mn

Files in Singapore for conversion to a public company; third round of fund-raising this year attracts global investors; funds to be pumped into building superior technological expertise

BS Reporters  |  Mumbai 

Flipkart, India’s largest e-commerce marketplace, has raised $700 million in fresh investment from existing as well as new investors Baillie Gifford, Greenoaks Capital, Steadview Capital, T Rowe Price Associates and Qatar Investment Authority. The e-commerce powerhouse, which is on a fund-raising spree, has raised funding for the third time in 2014. In May, it had raised $210 million (about Rs 1,200 crore). It had raised funding worth $1 billion (about Rs 6,000) in July.

The latest round of fund-raising has seen investment from existing stakeholders DST Global, GIC, ICONIQ Capital and Tiger Global. According to reports, the latest fund-raising has pegged Flipkart’s valuation at $11 billion. Flipkart’s rival Snapdeal had received $627 million from Japan's SoftBank in October.

“As with previous funds raised, these funds will be used towards long-term strategic investments in India and to build a world-class technology company, delivering superior customer experiences,” the company said in a statement.

According to the statement, Flipkart Ltd (incorporated in Singapore) has filed with the ACRA Singapore for conversion to a public company, which is a mandatory procedure for all where the number of shareholders exceeds 50.

Earlier, Flipkart was expected to begin the new year with another round of funding, perhaps crossing the $1-billion figure. Flipkart’s previous round of fund-raising had come in July. At that time, co-founders Sachin Bansal and Binny Bansal had made a public announcement at a Bengaluru hotel, about a $1-billion fund raising, the largest so far in the Indian e-commerce sector. A day later, Amazon had issued a statement that it was investing $2 billion in India.

2014 has been a year of blockbuster funding for e-commerce companies, a $4-billion market. Beside Flipkart's $1-billion funding in July, Snapdeal had raised $627 million from Japanese investor SoftBank in October.

Since no e-commerce company in the country is listed, they hardly ever publicised their fund raising till recently. While talk of mega bucks being raised from foreign investors brought e-commerce in the bracket of big league, it also meant a fair share of controversy to the players. Among other things, the foreign investment going into these has been under scrutiny. Foreign investment is not permitted in e-commerce but there's no rule barring it in a marketplace model. Most e-commerce entities in India are operating the marketplace model. Tax issues have also been raised in some states for hosting traders and keeping their inventory in some cases.

Yet, these are setting ambitious goals. Flipkart is believed to be looking at an annual GMV (gross merchandise sale) of $4 billion by the end of March 2015 and much younger rival Snapdeal at $3 billion. While Flipkart is believed to be hovering around a GMV of close to $3 billion, Snapdeal sources said the company touched $2 billion GMV around Diwali. Amazon, which started in India in 2013, is learnt to have crossed a GMV of $1 billion. Annual GMV is calculated on monthly average sales.

Flipkart, which started in 2007, had before the latest round of funding raised $1.76 billion. Its investors included Tiger Global, Accel Partners, DST Global, Naspers, Iconiq Capital, Sofina and Singapore sovereign wealth fund GIC. Flipkart claims to have 26 million registered users, clocking over eight million daily visits. The valuations of e-commerce players have been seen in a different light ever since the Chinese e-tailer Alibaba notched a $21.8-billion initial public offer of equity. Alibaba’s market capitalisation exceeds that of Amazon and eBay together.

Mukesh Bansal, who heads the fashion business at Flipkart and is part of the core management team running the Flipkart-Myntra combine, had said in a recent interview with Business Standard that an Indian Alibaba was inevitable in the near future. Without naming any contenders, he had said the e-commerce leader in India was expected to hold 70-80 per cent of the market in the next four to five years. In market share, Alibaba is at that point now, with an estimated 80 per cent of the Chinese e-commerce market.

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First Published: Sat, December 20 2014. 23:05 IST