Internet retailer Flipkart has begun preparations for an encore to its mammoth fundraising exercise of last year and is looking to raise $1.7 billion (Rs 10,500 crore) in the coming months, four people familiar with its thinking have said.
The Bengaluru-based firm, which created a record in India's startup funding history last year by mopping up $1.9 billion in three rounds of fundraising, is looking at a valuation of around $15 billion in the latest funding round that two of the people cited above said would be anchored by its biggest investor, US-based Tiger Global Management. Tiger could invest up to $700 million in several tranches, these sources said.
A so-called "handshake agreement" had been reached between Flipkart and the New York-based firm that had been sealed during the recent visit of its partner, Lee Fixel, said these sources.
"It (the fundraising) is being considered," said a person directly familiar with the plan, adding that the amount being talked about was in the "ballpark" of $1.7 billion.
Flipkart and Tiger Global did not reply to emailed queries. A senior company executive, however, pointed out that Flipkart was still to receive money from its last fundraising round of December last year, thereby suggesting that a fresh fundraising was not imminent.
Flipkart's last fundraising round in December had pegged its valuation at $11 billion. The company, which is still to make any profit, was valued at $1.9 billion at the start of 2014 but saw its valuations climb sharply as investors stumped up cash to grab a piece of the action in a market that rivals only China in its potential for growth.
One source said Tiger Global could be investing from its latest $2.5-billion (Rs 15,500 crore) fund that was raised in 2014, a significant portion of which has been earmarked towards internet-focused investments.
Existing investors will also participate on a pro-rata basis, with new investors expected to come in over the course of the year, the sources said.
The latest fund-raising exercise, when complete, will catapult Flipkart into the ranks of India's most pricey companies, with its valuation double that of other publicly-listed consumer companies, notably Godrej Consumer Products that has a market capitalisation of about Rs 40,000 crore and Dabur India with a market capitalisation of about Rs 47,000 crore.
The new capital will be used by Flipkart to bolster its position at the top of India's booming but fiercely competitive e-commerce sector that, according to an estimate by Nomura, is projected to be worth $43 billion by 2018.
Although Flipkart is the biggest internet retailer by a comfortable margin, it has aggressive rivals in the form of Amazon's India unit and Snapdeal, which counts eBay and Japan's SoftBank among its investors.
Jeff Bezos-led Amazon, the world's biggest online retailer, has made significant inroads in India, selling goods worth over $1 billion within a year of launching operations.
Last year, Bezos said Amazon will invest $2 billion in its Indian unit.
Snapdeal, the third contender in the race, received $627 million from Softbank last year and is on the road to raise more capital.
Experts believe Flipkart could also use the latest round of capital to consolidate its position in the marketplace by acquiring new ventures, enhancing inhouse technology development and funding deep discounts for consumers.
Last December, the eight-year old company announced that it had raised $700 million from a clutch of existing and new investors including Hong Kong-based hedge fund Steadview Capital, UK-based investment management firm Baillie Gifford, US based venture capital firm Greenoaks Capital, investment firm T Rowe Price Associates, and sovereign wealth fund Qatar Investment Authority.
In the last round of fundraising, Steadview put in $105 million and Tiger Global about $75 million.
In May 2014, Flipkart received $210 million led by Russian billionaire Yuri Milner's DST Global, while in July, it raised a mammoth $1 billion led by existing investors Tiger Global and South Africa's media group Naspers. The July fundraising valued the company at $7 billion, a first for an Indian internet firm.
In all, the company has so far raised a total of $2.5 billion over the last four years, outstripping most of its peers and other Indian consumer internet and technology ventures.
Flipkart has also filed to register as a public company with regulatory authorities in Singapore, as the number of shareholders had exceeded 50 at the end of the last round of funding. However, it also said that such a move was not an indication of an upcoming public market debut. Founded in 2007 by Sachin Bansal and Binny Bansal, Flipkart offers more than 20 million products, across 70 categories.
The company also claims to have over 26 million registered users, and 8 million daily visits. It was earlier reported that the company was targeting gross merchandise volumes of $8 billion in 2015, almost three times what it clocked last year.
The Bengaluru-based firm, which created a record in India's startup funding history last year by mopping up $1.9 billion in three rounds of fundraising, is looking at a valuation of around $15 billion in the latest funding round that two of the people cited above said would be anchored by its biggest investor, US-based Tiger Global Management. Tiger could invest up to $700 million in several tranches, these sources said.
A so-called "handshake agreement" had been reached between Flipkart and the New York-based firm that had been sealed during the recent visit of its partner, Lee Fixel, said these sources.
"It (the fundraising) is being considered," said a person directly familiar with the plan, adding that the amount being talked about was in the "ballpark" of $1.7 billion.
Flipkart and Tiger Global did not reply to emailed queries. A senior company executive, however, pointed out that Flipkart was still to receive money from its last fundraising round of December last year, thereby suggesting that a fresh fundraising was not imminent.
Flipkart's last fundraising round in December had pegged its valuation at $11 billion. The company, which is still to make any profit, was valued at $1.9 billion at the start of 2014 but saw its valuations climb sharply as investors stumped up cash to grab a piece of the action in a market that rivals only China in its potential for growth.
One source said Tiger Global could be investing from its latest $2.5-billion (Rs 15,500 crore) fund that was raised in 2014, a significant portion of which has been earmarked towards internet-focused investments.
Existing investors will also participate on a pro-rata basis, with new investors expected to come in over the course of the year, the sources said.
The latest fund-raising exercise, when complete, will catapult Flipkart into the ranks of India's most pricey companies, with its valuation double that of other publicly-listed consumer companies, notably Godrej Consumer Products that has a market capitalisation of about Rs 40,000 crore and Dabur India with a market capitalisation of about Rs 47,000 crore.
The new capital will be used by Flipkart to bolster its position at the top of India's booming but fiercely competitive e-commerce sector that, according to an estimate by Nomura, is projected to be worth $43 billion by 2018.
Although Flipkart is the biggest internet retailer by a comfortable margin, it has aggressive rivals in the form of Amazon's India unit and Snapdeal, which counts eBay and Japan's SoftBank among its investors.
Jeff Bezos-led Amazon, the world's biggest online retailer, has made significant inroads in India, selling goods worth over $1 billion within a year of launching operations.
Last year, Bezos said Amazon will invest $2 billion in its Indian unit.
Snapdeal, the third contender in the race, received $627 million from Softbank last year and is on the road to raise more capital.
Experts believe Flipkart could also use the latest round of capital to consolidate its position in the marketplace by acquiring new ventures, enhancing inhouse technology development and funding deep discounts for consumers.
Last December, the eight-year old company announced that it had raised $700 million from a clutch of existing and new investors including Hong Kong-based hedge fund Steadview Capital, UK-based investment management firm Baillie Gifford, US based venture capital firm Greenoaks Capital, investment firm T Rowe Price Associates, and sovereign wealth fund Qatar Investment Authority.
In the last round of fundraising, Steadview put in $105 million and Tiger Global about $75 million.
In May 2014, Flipkart received $210 million led by Russian billionaire Yuri Milner's DST Global, while in July, it raised a mammoth $1 billion led by existing investors Tiger Global and South Africa's media group Naspers. The July fundraising valued the company at $7 billion, a first for an Indian internet firm.
In all, the company has so far raised a total of $2.5 billion over the last four years, outstripping most of its peers and other Indian consumer internet and technology ventures.
Flipkart has also filed to register as a public company with regulatory authorities in Singapore, as the number of shareholders had exceeded 50 at the end of the last round of funding. However, it also said that such a move was not an indication of an upcoming public market debut. Founded in 2007 by Sachin Bansal and Binny Bansal, Flipkart offers more than 20 million products, across 70 categories.
The company also claims to have over 26 million registered users, and 8 million daily visits. It was earlier reported that the company was targeting gross merchandise volumes of $8 billion in 2015, almost three times what it clocked last year.
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