IDG Ventures India, a corporate venturing affiliate of media firm International Data Group, is considering the divestment of the remainder of its stake in India-based e-commerce platform Flipkart, Hindu Business Line reported on Tuesday.
Flipkart operates India’s most widely used e-commerce marketplace, with 46 million users, and is currently seeking up to $1bn in new funding in order to maintain its position amid competition from local rivals such as Snapdeal and international giants like Amazon.
IDG Ventures India acquired a stake in Flipkart when the e-commerce company bought fashion e-commerce site Myntra, in which IDG was an investor, for about $300m in May 2014.
The firm divested a 1% share of Flipkart in April 2015 at a valuation of $12.5bn, not long before Flipkart closed a $700m round that valued it at $15bn. It retains a 0.9% stake and two investors have told Business Line that IDG has been in contact with a view to initiating talks over a proposed share sale.
However, the sale price will probably be lower than it was last year. Another Flipkart shareholder, investment bank Morgan Stanley, downgraded its valuation of the company from $15bn to $11bn last month. A sale at that price would net IDG Ventures India another $99m.
The revaluation of Flipkart’s stock comes at a time when many big private companies are raising money at down valuations, but India’s e-commerce sector is seen as especially vulnerable because large global e-commerce players appear likely to enter the market directly rather than investing in local startups.
Notably, Sequoia Capital and Saama Capital India Advisors have both exited Snapdeal through secondary sales this year.
Flipkart has raised about $3.1bn since it was founded from investors also including media and e-commerce firm Naspers, Tiger Global Management, Steadview Capital, Greenoaks Capital, Qatar Investment Authority, DST Global, GIC, Sofina, Accel Partners, Vulcan Capital and Iconiq Capital.