Tiger Global’s 2.2% stake sale for $424 m boosts Flipkart’s valuation to $17-19 b

K. Giriprakash | Updated on January 31, 2018

After SoftBank’s investment, Flipkart had said it would have in excess of $4 billion of cash on its balance sheet   -  SOMASHEKAR G R N

SoftBank had earmarked $817 million for share buyback from investors, employees

Hedge fund Tiger Global has emerged the biggest beneficiary of the last month’s buyback of shares at e-commerce giant Flipkart fetching $424 million for sale of an estimated 2.2 per cent stake.

The value of the sale puts Flipkart’s valuation within the range of a whopping $17-19 billion, according to business intelligence platform, In April, 2017, Flipkart’s website had said the company’s post-transaction valuation was $11.6 billion after a round of funding from Tencent, eBay and Microsoft.

SoftBank’s Vision Fund

SoftBank’s $100-billion Vision Fund (SVF) which had invested, according to various sources, about $2.5 billion into Flipkart in August last year had earmarked $817 million for the buyback of shares from existing investors and former and current employees. The investment from SoftBank was a combination of direct funding of over $1.5 billion into the e-commerce major, termed as primary investment and purchase of shares from existing investors, termed as secondary investment.

SoftBank’s investment is considered the biggest-ever investment in an Indian technology company and after this investment, Flipkart had said the e-commerce company will have in excess of $4 billion of cash on its balance sheet. Before this investment came in, Tencent, eBay and Microsoft jointly had made investments aggregating to $1.4 billion in Flipkart, in April, 2017. As per Flipkart’s website, this funding round from the three global technology giants came at a post-transaction valuation of $11.6 billion.

After the buyback, SoftBank is now the largest shareholder in Flipkart with a stake of 23.62 per cent. Tiger Global is the second largest with 22.44 per cent of preference share capital. Naspers (MIH B2C Holdings BV) is the third largest with 14.57 per cent of preference share capital.

Accel India Fund managers (Accel + Erasmic) was the second biggest beneficiary whose sale of less than 1 per cent of its shares fetched the venture fund about $113 million.

The number of shares Tiger Global sold was about 49.8 lakh shares representing 15.77 per cent of its holding. This constitutes 2.2 per cent of the preference share capital of the company.

In an email to BusinessLine, Tiger Global’s spokesperson said the firm does not comment on its investments or investment strategy. Flipkart’s spokesperson said she will not be able to comment on the holding pattern.

Apart from these share sale, some of the other key funds that sold their shares were a fund associated with Yuri Milner, the fund manager who was recently in the news for links to the Kremlin. His was the third largest in terms of the amount it fetched the fund (DSTAsia III and DSTAsia IV), which was $50 million. Milner, a billionaire, was an early-stage investor in Facebook and Twitter through his venture fund, Digital Sky Technologies (DST) Global.

Divesh Makan, known as Spider of Silicon Valley by an international magazine, made about $49 million through his fund, Iconiq Capital. Makan is learnt to have made most of his money through investments in Facebook. Some of the other funds which benefited from the share sale were Sofina SA, Belgium which mopped up $28 million; GIC Singapore with $29.2 million, Vulcan Capital with $16 million and Kalari with $4.7 million.

Buyback of ESOPs

Flipkart had also offered the buyback to its existing and former employees through the repurchase of ESOPs. In December, it completed its $100 million repurchase of the stock options.

Apart from Flipkart, employees of Myntra, Jabong and PhonePe participated in the repurchase of the options.

Published on January 30, 2018

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