Bennett, Coleman and Co. Ltd. (BCCL), the media firm holding “Times Of India” has bought a small share in Flipkart, India’s largest e-commerce firm for ₹260 Crores.
The deal was made for cash and advertising space in the BCCL media properties, according to the regulatory documents and one person familiar with the matter.
A private placement offer of about ₹260 crores was made by Bennett, Coleman and Co. Ltd. to buy a warrant for class B equity in Flipkart, according to documents filed with the Registrar of Companies and Tofler, a company research platform.
The media giant invested ₹26 crores in Flipkart in December last year, the remaining amount will be paid when it converts the warrant into equity shares of Flipkart.
Flipkart has been slaughtered by valuation markdowns from 5 of its investors over the past year. This was to ensure fresh round of funding for the e-commerce company. While people familiar with the fundraising have said a so-called down round (when investors purchase stock or convertible bonds from a company at a lower valuation than the preceding round) is certain for Flipkart, the deal with BCCL indicates the drop in its valuation may not be as steep as some investors and analysts predicted.
In June last year, Mint reported that Flipkart was in talks to sell an undisclosed stake to BCCL in a deal that would be funded partly by cash and partly by ads.
However, Sivakumar Sundaram, chief executive of Brand Capital at BCCL, did not respond to emails seeking comment. A Flipkart spokesperson too declined to comment.
BCCL owns media properties such as The Times of India and The Economic Times newspapers and ET Now and Times Now TV channels.
BCCL’s investment in Flipkart comes at a time when India’s e-commerce poster boy is showing early signs of a sustained turnaround after a year of upheaval that marked a change in roles of co-founders Sachin Bansal and Binny Bansal. Kalyan Krishnamurthy, a former executive at Flipkart’s largest investor Tiger Global Management, replaced Binny as CEO last month.
BCCL struck a similar deal with online marketplace Snapdeal (Jasper Infotech Pvt. Ltd) in February 2016. Globally, it also has investments in a large number of start-ups such as Uber Technologies Inc., services provider Haptik and education start-up Coursera.
Source – Livemint