Flipkart sells small stake at Rs 260 crore for cash and advertising

Flipkart has sold a small stake to Times of India publisher. BCCL invested Rs 26 crore in Flipkart in December. The rest will be paid as the warrant converts into equity shares of Flipkart.

Flipkart, pioneer of Indian e-commerce industry and the most promising startup, has been on a bumpy ride. From marked down valuations to top reveal management rejig, the company has seen it all.

Now, news has it that Flipkart has sold a small stake to Times of India publisher Bennett, Coleman and Co. Ltd (BCCL) for Rs 260 crore. A Livement report citing regulatory documents and a person familiar with the matter claims that Flipkart has sold the stake for cash and advertising space.

BCCL is known to have invested Rs 26 crore in Flipkart in December, and it will cough up the rest as the warrant converts into equity shares of Flipkart. The report says that BCCL had made a 'private placement offer to buy warranty for Class B equity shares in Flipkart'.

"The Flipkart-BCCL deal is a so-called private treaty deal. First introduced by BCCL in 2004 to build a large portfolio of holdings, such deals were once controversial, especially because they also involved positive media coverage. Since then, however, such deals have become commonplace and transparent, and have to meet mandated disclosure norms, Livemint explains. BCCl is known to have inked a similar deal with Snapdeal last year.

The reports about the rejig in January stated that the changes come as the company is trying to raise fresh funding to compete with arch-rival Amazon. It is now believe that the company is seeking $1 billion in funding. The problems became more prominent last year when it was marred by wrong decisions, layoffs, reshuffling of top management and some big exits. Last year, Flipkart lost its top position to arch-rival Amazon. By November 2016, Flipkart saw almost four markdowns in 9 months.