eBay, Tencent may pick up stake in Flipkart for

$1 billion

eBay and Tencent are likely to pick up stake in India's largest e-commerce

marketplace Flipkart with an investment of $1 billion, as they look to get a

stronghold in the country's fast-growing online retail space.

According to a Times of India report, the latest funding round values the

Bengaluru-based firm at $11 billion, lower than the $15.2 billion valuation it had

achieved in its previous round. However, this figure is far higher than the $5.39

billion valuation mutual fund investors such as Morgan Stanley have given

Flipkart.

Flipkart has been in talks to raise funds for several months now, with the

valuation of the Indian Internet giant being the main contention for investors to

walk away. Talks between China's Alibaba and US retail giant Walmart are said to

have fallen apart after both parties were unwilling to value Flipkart at the $12

billion which it was asking.

It isn't clear if Tiger Global, the largest investor in Flipkart which has pumped in an

estimated $1 billion into the company over several rounds, will sit this round out.

Kalyan Krishnamurthy, CEO of Flipkart, was an eBay executive who then moved to

investor Tiger Global and then eventually put in place at the Indian company to

steer it away from doom on account of the growing aggression from rival

Amazon.

Krishnamurthy's biggest success calling the shots at Flipkart has been the success

of the BigBillionDays sale last year, when it pipped Amazon by a big margin

according to industry watchers.

Amazon in a short span of three and a half years has been able to close the gap

with Flipkart. The US online retailer's aggression in the Indian market has caused

knee-jerk reactions from the Indian firm, which initially stepped up spending to

keep up, but was then forced to cut its cash burn when investors began

demanding profitability.

Even with the $1 billion cash infusion, it isn't clear if Flipkart will step up

discounting across the board or will it continue to chase frugal growth as it has

been doing so for the past few quarters. As Amazon begins picking off categories

in which Flipkart is dominant, Krishnamurthy will have to decide whether it's

worth letting go of some turf and working on improving customer experience

which could eventually bring customers back.

Article By – Business Standard