It is estimated that the online retailer has, so far, raised over $1.7 billion from investors, including the current transaction
India's largest e-Commerce firm Flipkart on Tuesday said it has raised $1 billion (over Rs6,000 crore) in fresh funding from a group of investors, the largest so far in the fiercely competitive online shopping segment in the country.
This round of funding has now valued Flipkart at around $7 billion. Flipkart's valuation was estimated between $2.5 billion to $3 billion in May, when it had its previous funding round. In May, Flipkart had raised $210 million. It is estimated that the firm has, so far, raised over $1.7 billion from investors, including the current transaction.
"The funds will be used to make long-term strategic investments in India, especially in mobile technology," Flipkart co-founder and CEO Sachin Bansal told reporters.
Flipkart was rumoured to be considering an initial public offering (IPO) for raising capital but that has now been put to rest with this successful round of funding. "By 2020, India will have more than half a billion mobile Internet users. Our intense focus on mobile and technology puts us in a unique position to take advantage of this massive opportunity," Bansal added.
"IPO is not in consideration at all, we are not thinking about it. We have not settled on a business model that we can take public," Bansal said.
The Bangalore-based firm, founded by Sachin Bansal and Binny Bansal, counts Accel Partners, Dragoneer Investment Group, Morgan Stanley Investment Management, Sofina and Vulcan Capital among its other investors.
For a business with relatively lower brick and mortar investments, it has proven to be hugely capital intensive and Amazon itself has been a perpetually capital thirsty company. With Amazon's entry in India last year, the competition in the online retail market became exceedingly fierce. Consolidation seems to be on the cards with Flipkart's recent buyout of Myntra, another online fashion retailer. The home-grown e-retailer had acquired online fashion retailer Myntra in May in what is estimated to be a Rs2,000-crore deal. It had also announced an investment of $100 million (around Rs600 crore) in its fashion business over the next 12-18 months.
While the S&P BSE Sensex has logged in 22.76% growth for investors, gold prices have fallen by 5% so far in 2014
Indian equities have overshadowed gold’s glitter by giving handsome returns of almost 23% to investors during the first seven months of 2014.
While the BSE’s 30-stock benchmark index S&P BSE Sensex has logged in 22.76% growth for investors so far in 2014, gold prices have fallen by 5%. Silver however, managed to generate a marginal return of 2.38%.
According to market experts, this year is proving to be good for the Indian equities, riding high on improved domestic investor sentiment and robust foreign fund inflows.
Gold and stock prices generally follow opposite trends. Gold is normally preferred as a hedge against inflation, and investors tend to park their money in bullion considering it a safer bet at times of market uncertainties.
After outperforming stock markets for more than a decade, gold has been on the back foot for more than two consecutive years now vis-a-vis equities.
Gold prices were ruling at Rs29,800 per 10 grams on 31 December 2013 and silver at Rs43,755 per kg. While gold closed Monday at Rs28,370, silver ended at Rs44,800 per kg.
On the other hand, the S&P BSE Sensex, which was at 21,170 on 31st December last year, settled at 25,991 on Monday. It recorded its all-time high level of 26,300.17 on 25th July.
Since January this year, overseas investors, major drivers of Indian equities, have made a net investment of $25.5 billion or Rs1.53 lakh crore.
Last year, the Sensex gave a positive return of about 9% to investors, while gold prices fell about 3% and silver plummeted close to 24%.
In 2012, the Sensex rose over 25%, which was nearly double the gain of about 12.95% in gold prices. The appreciation in silver was at about 12.84% in 2012.