Flipkart raises $1 bn in down round

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Flipkart raises $1 bn in down round

In order to fight back against the increasing competition, e-commerce company Flipkart has completed a fund raising of about United States dollars 1 billion (Rs 6537 crore) and the company is aiming to raise USD 1 billion more in the coming months, the people familiar with the matter said. In the beginning of this year, Kalyan Krishnamurthy of New York's Tiger Global Management replaced one of the company's founder and was appointed as the CEO.

Previous year has been hard for Flipkart - in many months Amazon has performed better in terms of gross merchandise value (GMV) - as the company found itself torn between warding off competition, management changes and raising capital.

According to the media reports, the company's latest fundraising shows investors believe Flipkart has a positive chance of defeating their competitors. Its co-founders stood aside as the former eBay executive took control of its biggest sale season, fired senior managers and set tough traffic and sales targets. Flipkart had a peak valuation of $15 billion in 2015.

Recently, Morgan Stanley Institutional Fund Trust - a mutual fund arm of Morgan Stanley revised value of its each share in Flipkart at $50.51 per share as of December 2016, down 3.10% from $52.13 per share of September 2016.

The fight however may just be getting started.

After a series of setbacks and speculations that the Indian e-commerce industry is going through tumultuous times and also facing stiff competition from other major players like Amazon, Flipkart has now announced the new rounds of fundraising and an increase in its valuation.

That might change, and the e-commerce battle in India can get messier, especially as Jack Ma's Alibaba is readying itself to enter India in a joint venture with Paytm Mall, One97's physical goods marketplace. Flipkart will have to persuade investors to inject still more capital if it's to counter its deep-pocketed rivals. Hundreds of Indian internet startups are losing money, cutting jobs and reducing valuations in exchange for fresh financing.

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