Flipkart gets a valuation boost from Fidelity

After a string of six successive markdowns, Indian e-commerce giant Flipkart has received a welcome break from American mutual fund company Fidelity Investments.

The US-based company's Fidelity Rutland Square Trust II fund has hiked the value of its shares in the company. According to filings with the Securities and Exchange Commission, the mutual fund marked up the value of the shares by 2.8% to $84.29 apiece at the end of May from $82 three months earlier.

The development was first reported by The Indian Express.

The marking up comes two months after Fidelity 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.

Fidelity's drastic cut had placed the e-commerce company's valuation at less than $10 billion during its valuation markdown in comparison to the $15.2 billion valuation that Flipkart acknowledged in September last year based on in its last funding round in mid-2015.

Fidelity invested in Flipkart in 2013 during the company's Series D round. It should be noted that the value of its investments has risen since it bought shares of Flipkart. The total value of Fidelity's shares has risen to about $4.3 million from $1.2 million since 2013.

In June, Flipkart had suffered the sixth markdown when a mutual fund managed by US-based investment firm Vanguard Group slashed the value of its stake in the company by as much as 25% in the quarter through March.

A fund managed by Morgan Stanley reduced the value of its investments twice in the past while Fidelity Rutland Square Trust II, Valic Co., and T. Rowe Price have each lowered the value once.

Vanguard lowered the value of the Flipkart shares it first bought to $102.65 apiece as of 31 March 2016 from $136.87 on 30 September 2015. At this price, the overall valuation of Flipkart would be around $11 billion. It also brought down the value of the shares it bought in the second tranche, to $106.71 apiece from $142.23.

Morgan Stanley, in its second valuation markdown, had slashed the value of its stake in Flipkart by 15.5% to $87.86 at the end of March 2016 compared with $103.97 three months earlier. In the first instance, the company had reduced the valuation by over 27% in February.

In April, American mutual fund T Rowe Price knocked down the holding value of its investment in Flipkart by 15.1%. In early May, US mutual fund Valic Co. had reduced the value of their holdings in Flipkart by 29%.

According to Morgan Stanley's latest markdowns, Flipkart was valued around $9.4 billion while T. Rowe Price valued the firm at about $12.9 billion. Valic put the overall valuation a tad less than Morgan Stanley.

Flipkart CEO Binny Bansal had previously 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. (Click here for more on Flipkart's troubles and Binny Bansal's strategy for the company.)

Flipkart also counts Tiger Global Management, Naspers, Accel Partners, Iconiq Capital, GIC, DST Global and Sofina Societe, among others, as investors.

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