Two more foreign mutual funds have marked down the value of their holdings in India’s biggest ecommerce firm Flipkart, signalling weakening investor sentiment towards new economy firms. The slew of mark downs in recent months indicates that investors view the firm as overvalued.
Valic Co has marked down the value of its Flipkart holding by 29.4 per cent to $82 a share as of February, from $135.8 a share in August, according to its regulatory filing with the Securities and Exchange Commission.
Another fund owned by Fidelity has marked down the value of its holding in Flipkart by 39.6 per cent to $82 a share in February, down from $135.8 a share in August. Both mutual funds had participated in Flipkart’s Series D round, when it raised $360 million in two tranches.
Bengaluru-based Flipkart had raised $700 million in July for a valuation of $15 billion. Mutual funds owned by Morgan Stanley and T Rowe Price had also cut the value of their holdings. In late February, Morgan Stanley Institutional Fund Trust, another mutual fund investor in Flipkart, slashed the value of its holdings by as much as 27 per cent. Then, last month, T Rowe Price disclosed in a filing that it had cut the value of its stake in Flipkart by 15 per cent. “The first quarter was an extremely volatile period for global equity markets. In determining fair values for our private investments, we continued to follow our long-established process of considering a variety of company-specific and market-based factors,” a spokesperson from T Rowe had said in an email response to The Hindu , after the mark down. It had marked down the value of Silicon Valley firms Uber and Dropbox as well.
Flipkart raised $700 million from investors in July last year at a valuation $15 billion.
Flipkart’s executive chairman Sachin Bansal does not seem to be too concerned over the mark downs.
Last week, he had said he did not read too much into the fund actions, citing that the mark downs by investors were theoretical and not based on transactions.
“I do not think anyone's valuation has changed just because somebody or small shareholders of these companies have changed their opinion. I do not worry too much about that,” Bansal was quoted as saying at the TiE summit in Delhi.
