VCs offload Equity Worth Rs 1397Cr In Flipkart & JustDial…Is it The Time For Exit Now?
Within the Venture Capital world, there is a famous saying that its more difficult to take the exit decisions, compared to investment decisions. It seems that Venture Capitalists engaged with the Indian Ecommerce firms have made up their minds regarding cashing out their exits.
Within a span of few days, VCs have sold their stakes worth Rs 1397 crore in two major ecommerce ventures in India.
Is this a sign of something new coming up?
Helion Venture & IDG Ventures Exit Flipkart
In 2012, when Flipkart had bought LetsBuy, Helion Venture Partners entered into the complex structure of Flipkart with a 0.2% stake. Against a valuation of Rs 77,000 crore, Helion sold their stake of 0.2%, which amounts to Rs 156 crore.
IDG Ventures India, had a stake in Myntra and when Flipkart acquired them last year, then IDG Ventures had a stake of 1% in Flipkart. Yesterday, they sold some of their stake at a valuation of Rs 77,000 crore of Flipkart, which amounts to Rs 940 core.
It is not yet clear as to which party bought these stakes.
This news of VCs offloading their stakes comes at an interesting juncture as Flipkart is rumored to be raising another round of funds against a new valuation of Rs 14-15 billion. This new round of investments would be led by Tiger Global Management and Qatar Investment Authority, as per details coming in. Last year in December, when Flipkart raised $700 million, it was valued at $11.5 billion which is now Rs 77,000 crore.
In case this deal goes through, then Flipkart will become the only Indian eCommerce firm to have raised more than $2.5 billion since May last year. As of now, there are still 15 investors who have backed this mega-portal.
Flipkart Funding Till Date – USD 2451 Million
|First Round||Accel India||2009||USD 1 Million|
|Second Round||Tiger Global||2010||USD 10 Million|
|Third Round||Tiger Global||June 2011||USD 20 Million|
|Fourth Round||Naspers / ICONIQ Capital||August 2012||USD 150 Million|
|Fifth Round||Naspers, Accel Partners, Tiger Global, and ICONIQ Capital||July 2013||USD 200 Million|
|Sixth Round||Dragoneer Investment Group, Morgan Stanley Investment Management, Sofina and Vulcan Capital, Tiger Global||Oct 2013||USD 160 Million|
|Seventh Round||DST Global||May 2014||USD 210 Million|
|Eighth Round||Tiger Global, DST Global, Accel Partners (plus other new investors)||July 2014||USD 1000 Million|
|Ninth Round||Steadview Capital, Baillie Gifford, Greenoaks Capital, T. Rowe Price Associates, Qatar Investment Authority, DST Global, GIC, ICONIQ Capital, Tiger Global.||December 2014||USD 700 Million|
|Total||USD 2451 Million|
Tiger Global Exits JustDial
Tiger Global used to own 13.22% stake in JustDial, out of which they have offloaded 3.41% stake for Rs 300.55 crore. As JustDial is listed with BSE, data tracked via stock exchanges indicate that Tiger Global has sold 24 lakh shares at a rate of Rs 1252.30 per unit of share.
This 8 year old investment in JustDial has brought returns of 20 times for Tiger Global.
The current stake if Tiger Global in JustDial amounts to Rs 911 crore as of now.
Interestingly, on the same day, private equity firm Goldman Sachs has bought 19,40,098 shares, amounting to Rs 242.90 crore. The shares of JustDial increased 0.84% to reach Rs 1319.70 per unit, thereby indicating that shareholders have approved this deal.
What Does This Mean for Ecommerce Industry?
Ecommerce experts are stating that the time is now ripe for VCs to encash their investments, as market consolidation has been going on for some time.
Raja Lahiri, from Grant Thornton said, “It’s an opportune time for investors, especially those who have been invested in ecommerce companies for more than 4-5 years, to start offloading. That is the trigger for these secondary sales,”. He added that the trend may be visible for larger Internet companies as well.
Talks are also on regarding Flipkart’s IPO launch in USA, later in the year, and to do that, they are now busy creating a war chest of venture funds to face the uncertain future post-IPO.
There is another theory according to which, investors are now taking a pause, and offloading their stakes to understand whether such insane billion dollar valuations are really worth it. Between the periods January, 2013 – March, 2014, more than $4.3 billion have been invested by VCs in Indian Ecommerce firms, out of which 60% have been soaked in by Flipkart and Snapdeal.
Flipkart is worth right now at $11.5 billion or Rs 77,000 crore, whereas Snapdeal is valued at $5 billion or Rs 30,000 crore. If we compare, then India’s biggest three offline retailer (in organized retail sector) : Future Retail, Shoppers Stop and Pantaloons Fashion and Retail have combined valuation of little more than $1.5 billion or Rs 9000 crore.