Bengaluru: US-based mutual fund giant Fidelity Investments has marked down the valuation of its holdings in Flipkart by over a third, marking the steepest valuation markdown of India’s most valuable Internet start-up since Morgan Stanley also drastically lowered the value of its holdings in Flipkart in November.
Fidelity Rutland Square Trust II, which invested in Flipkart in the Series D round it raised in 2013, has marked down the value of Flipkart’s shares by 36% to $52.13 per share as on November 30, 2016, according to regulatory documents filed with the US Securities and Exchange Commission.
Fidelity, which currently holds 52,096 shares in Flipkart, had valued its shares at $81.55 apiece during the three months ended 31 August.
The latest markdown from Fidelity values Flipkart at roughly $5.58 billion—similar to the $5.54-billion that Morgan Stanley last valued the Internet startup at.
In November, a mutual fund managed by Morgan Stanley drastically marked down the value of its holdings in Flipkart by about 38%, marking at least the fourth consecutive valuation markdown from Morgan Stanley in the course of nine months.
The timing of the latest markdown come at an awkward time for Flipkart, when it is facing a massive top-level exodus amidst the biggest organizational overhaul in its 10-year history and also looking to raise a fresh round of funds close to its peak valuation of $15 billion.
Mint reported in October that Flipkart was in talks with both existing and new investors to raise anywhere between $500 million to $1 billion in fresh funds by the end of the current financial year.
More worryingly for Flipkart, the latest markdown from Fidelity came in during the September-November period, when Flipkart actually witnessed a turnaround in its fortunes and beat arch-rival Amazon India handily during the crucial Diwali season sale.
During the Diwali season sale, Flipkart outsold Amazon by at least 20-30% to post gross sales of Rs5,000 crore for the month of October, Mint first reported on November 2.
Earlier on Wednesday, Mint reported that two more senior executives, engineering heads Hari Vasudev and Ashish Agrawal, have resigned from Flipkart this week, joining three others who left earlier this month, in the fastest clear-out of senior leaders the company has seen.
Flipkart’s new chief executive officer Kalyan Krishnamurthy is now left with just three senior leaders to steer the day-to-day operations at the company, following the exits of Saikiran Krishnamurthy, the former head of Flipkart’s logistics business, marketing head Samardeep Subandh and chief product officer Surojit Chatterjee earlier in January.
A Flipkart spokeswoman did not immediately respond to requests for comment.
Earlier in January, another mutual fund investor, T. Rowe Price had also trimmed the valuation of its holding by 4% to about $9.9 billion.
Mint first reported on December 2 that US-based investment firm Vanguard Group had marked down the value of its holding in Flipkart by a third to about $7.6 billion.
“The latest reshuffle at Flipkart is good for the company—they needed someone at the helm who could inject some financial discipline into the ranks and also help pave the way for a proper exit for all investors a few years down the line,” said an investor in Flipkart, who requested anonymity.
Another venture-capital investor expressed concerns over Flipkart’s ability to fend off a rampaging Amazon India, which has grabbed significant market share from India’s e-commerce poster boy over the course of the last 12-18 months.
“At the time when we invested in Flipkart (in 2013), we did not anticipate that Amazon would rise so quickly and pose such as significant challenge to Flipkart in such a short span of time,” said the second Flipkart investor. He too requested anonymity.
Flipkart, however, isn’t the only large Indian “unicorn” start-up facing a markdown or a “down round”.
Bengaluru-based cab-hailing service Ola (ANI Technologies Pvt. Ltd), another Indian unicorn, is facing a so-called down round as it is likely to raise its next round at a lower valuation than the $5 billion it fetched in its previous round, Mint had reported last June.
At least six mutual fund investors at Flipkart now value the company in the range of $5.5 billion to $10 billion.
The company last raised cash at a valuation of $15 billion nearly two years ago.