Morgan Stanley has marked down value of shares for Flipkart, one of its managed mutual funds by 27%. Flipkart is a high flying Indian ecommerce firm. The devaluation strengthens global investors' doubt for overvaluation of the online mega store.
The markdown appears as mutual funds have slashed the value of some Silicon Valley high profile startups. Messaging app Snapchat and data analysis company Palantir Technologies Inc. are among others witnessing the marking down, reports The Economic Times.
The Institutional Fund Trust Mid Cap Growth Portfolio, the mutual fund, now values its stake in the online megastore at $103.97 per share. This reflects a valuation reduction from about $15.2 billion to $11 billion for the startup, according to a report published in VentureBeat.
However, Morgan Stanley's investment in Flipkart has been estimated for $58.9 million in December. This investment is part of $3.15 billion fund, the Indian online megastore raised so far. The ecommerce giant's planning for raising another $1 billion may witness a huge blow with the marking down since investors will now benchmark Flipkart at $11 billion, forecasts Business Standard. Morgan Stanley has picked up shares in Flipkart as part of its Series D round of funding in 2013. The Bengaluru based online retailer has procured $360 million in two tranches through that round. The financial services corporation holds between 1-2% stakes in Flipkart. The Manhattan based finance giant has revalued its Flipkart stake from $80.62 million in June 2015 through a regulatory filing with SEC. With the previous estimations, share value of Flipkart has been accounted as $142.24 in June 2015 and $117.96 in December 2014. Flipkart's fundraising indicates that the company is not yet ready for public offerings. The online megastore has been founded by Sachin Bansal and Binny Bansal, two IIT, Delhi college mates. The Indian online retailer aims to sell goods for $12 billion up to March, a three fold increase compared to last year. Debabrat Mishra, director at Hay Group cites three reasons for marking down own investment in Flipkart by Morgan Stanley. The reasons are, continued losses, drying up funds and the economic outlook for India. Gross merchandise value (GMV) or inventory with Flipkart, Amazon and Snapdeal has been estimated as $13.5 billion. Among the estimation, Flipkart holds the lion share for 45%, according to a Morgan Stanley report published last week.
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