Morgan Stanley Fund Cuts Valuation of Its Holding in India's Flipkart

By Corinne Abrams and Newley Purnell 

MUMBAI -- A Morgan Stanley Investment Management Fund has slashed the valuation of its holding in India's leading e-commerce firm Flipkart Internet Pvt. by 38%, as the startup faces increased competition from U.S. rival Amazon.com Inc. and others.

In a filing this week to the U.S. Securities and Exchange Commission for the quarter ended Sept. 30, the fund called the Morgan Stanley Select Dimensions Investment Series said it held 1,969 shares in the company, which it valued at $102,644, or $52.13 a share.

For the quarter ended June 30, the company reported it had the same number of shares, but valued them at $165,967, or $84.29 a share

In a statement, a Flipkart spokeswoman said the Morgan Stanley fund's markdown was a "purely theoretical exercise" that is "not based on any real transactions."

The spokeswoman said Flipkart is "seeing a strong traction in our business momentum and operating performance."

Flipkart, which was founded in 2007, has for years been India's top online seller of goods ranging from smartphones to cooking utensils to clothing. Investors like U.S.-based Tiger Global Management have poured funds into the Bangalore-based firm, pushing up its valuation as high as $15 billion on optimism India's internet economy will take off the way China's did.

But Amazon has been piling on the pressure of late as it seeks growth in the country of more than 1.2 billion as consumers increasingly get online for the first time via inexpensive smartphones. Founder Jeff Bezos has pledged to spend billions of dollars to win the country's market, with the company splashing out on advertising and expanding its network of warehouses. Analysts say Amazon is stealing market share from Flipkart.

This isn't the first time Flipkart has had its valuation cut. Earlier this year, three funds with small stakes in the company slashed as much as 23% off the value they gave their holdings.

Write to Corinne Abrams at [e-mail] and Newley Purnell at newley.purnell @wsj.com

(END) Dow Jones Newswires

November 30, 2016 07:48 ET (12:48 GMT)

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