Indian etailer giant Flipkart on their course to raise $1.7 billion (Rs 10,500 crore) this year, also in line with their colossal fundraising last year, has notched up their first funding instalment of $700 million (Rs 4,500 crore) by participation from existing investors like Steadview Capital, scooping up the valuation of the firm to a staggering $15 billion! With further fund raising in the pipeline the company is projected by Nomura to be worth at $43 billion by the end of 2018.
Although the authorities have refused to comment on the latest fundraising activities, according to reliable sources, Flipkart is thrusting forward to give strong counter competition to the other competitors like Amazon, Paytm and Snapdeal sharing the same Indian ecommerce niche, with Amazon among them officially announcing a whooping $5 billion investment in the Indian ecommerce market. The mammoth in process fund-raising could well categorically catapult Flipkart in the same ranks with India’s most valued companies like Godrej and Dabur India.
According to reliable sources, the bengaluru-based firm is looking forward to receive around $700 million in several tranches, in line to the region of about $1.7 billion, through its biggest investor US-based Tiger Global Management from its acquired fund of $2.5-billion or INR 15,500 crore in 2014. Another agreement is also said to be done and dusted between Flipkart and the New York-based firm during the recent visit of its associate, Lee Fixel. According to Economic Times, Flipkart has also been in talks with New York-based hedge fund Tiger Global and some other investors for some time now for yet another massive capital-raising figuring to about $1 billion. With existing investors continuing to participate on pro-rata basis, new investors are expected to join the move over the due course in the year.
It is earlier reported in that Flipkart was aiming for an annual sales in terms of retail price or technically termed as gross merchandise volume (GMV) of around $10-12 billion in 2015, almost three times than that of last year, by incorporating high profit margin categories such as furniture and home decor solutions, travel and real estate booking services etc.
With fierce competitors like Snapdeal and Paytm in the Indian ecommerce space also accelerating rapidly and threatening to gain dominance, experts believe Flipkart could use up the raised capital in strengthening their position in the Indian ecommerce marketplace with the following:
A process that began almost exactly 2 years back in July 2013, the 8-year-old firm Flipkart has raised around $3.4 billion in total till now from various global investors keen to invest on India’s ever growing emarket with online consumers increasing with every passing day thanks to the increased accessibility of smartphones to larger part of population. In December 2014 in the last officially known round of fund raising, Flipkart secured $700 million by combining new as well as existing investors including the likes of US based venture capital firm Greenoaks Capital, investment firm T Rowe Price Associates, UK-based investment management firm Baillie Gifford, Hong Kong-based hedge fund Steadview Capital and sovereign wealth fund Qatar Investment Authority besides Tiger Global putting in about $75 million and Steadview contributing $105 million to take the valuation to about $11 billion in only six months after raising $1 billion in the previous two rounds, making 2014 a record year in India’s startup funding history with fund raising of approximately $1.9 billion.
According to investment specialist firm Morgan Stanley, by 2020 the Indian emarket, with its massive consumer base and bright prospect, is predicted to grow from $11 billion in 2013 to an unbelievable $137 billion! Amazon’s Chief Financial Officer Brian Olsavsky, after witnessing the recent second-quarter earnings call, also resonated the same idea by touting Indian emarket as a kind of market where they can confidently “double-down” on any positive surprise that it pops up with.
In battle to stay power and gain upper hand in the Indian ecommerce niche, global online retail giant Amazon is preparing a $5-billion investment to expand in Indian emarket, in addition to Bezos commitment of investing $2 billion in Amazon’s Indian unit. Snapdeal which has eBay and Japan’s SoftBank among its investor allies are the third contender in the fundraising race with the firm mopping up $627 million from Softbank in 2014 and is well on road to raise more. The Delhi-based Paytm is also not far behind with Chinese ecommerce giant Alibaba in terminal talks for investing $600 million by increasing its stake up to 40%.
With Flipkart gearing up at the right time with these massive new capital infusions to bolster its position the fiercely competitive ecommerce sector, it is sure to set the stage for an exciting race to reach the top of Indian online retail market.
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