Bengaluru: A mutual fund managed by Morgan Stanley has marked down the value of its holdings in Flipkart for the fifth consecutive quarter, even as India’s most valuable internet start-up looks to close a fresh round of funding where it may end up raising as much as $1.5 billion from new and existing investors.

In a regulatory filing with the US Securities and Exchange Commission, Morgan Stanley Institutional Fund Trust has valued each share of Flipkart Online Services Pvt. Ltd at roughly $50.51 apiece, down from $52.13 a share during the September quarter.

Also read: How Flipkart got back in the game

The Morgan Stanley-owned mutual fund, which invested in Flipkart during its Series D round, currently holds 566,827 shares in the online retailer.

That indicates a valuation of about $5.37 billion—a marginal cut compared with the previous markdown from Morgan Stanley, when it slashed Flipkart’s valuation by about 38% to $5.54 billion.

While the latest filing was issued by Morgan Stanley Institutional Fund Trust and the filing in November was issued by Morgan Stanley Select Dimensions Investment Series, the valuations mentioned by both funds are comparable since they both own common stock in Flipkart.

A Flipkart spokesperson did not immediately respond to a mail seeking comment on the latest markdown.

However, in earlier interviews, Flipkart founders Sachin Bansal and Binny Bansal (they are not related) have termed markdowns from mutual fund investors as “theoretical exercises".

In a recent interview, in fact, Sachin Bansal went as far as to call markdowns a symptom of “uninformed opinions of some small investors".

“See, we are not a public company, so we don’t release our numbers publicly. Any investor who has an opinion on our valuation outside, including who are already invested in us, they are doing it (markdowns) based on some public information which is accessible to everybody... As we’ve always said, valuation is what will happen when a real transaction takes place and not just on paper," said Bansal in an interview on 8 December.

Earlier in February, Mint first reported that Flipkart was in talks for a mammoth fund-raising of up to $1.5 billion from new investors, including Tencent Holdings Ltd, eBay Inc., PayPal Holdings Inc. and Microsoft Corp., at a valuation of $10-12 billion. Flipkart also announced a strategic partnership with Microsoft earlier in February.

In January, Mint reported that US mutual fund giant Fidelity Investments had slashed the valuation of its holdings in Flipkart by more than a third in November to about $5.58 billion.

The latest valuation from Morgan Stanley is likely to be off the mark, as Flipkart is currently in talks to raise fresh funds at a valuation of $10-12 billion, according to at least three people aware of Flipkart’s present fund-raising talks.

Moreover, over the past six months, Flipkart has witnessed the beginning of a turnaround in its fortunes under former Tiger Global Management executive Kalyan Krishnamurthy, who took over as CEO in January and has reclaimed the top spot in Indian e-commerce from arch-rival Amazon India, when stand-alone gross monthly sales are taken into account.

Investors and experts that Mint spoke to also said the latest markdown will have little bearing on its latest fund-raising efforts.

However, a valuation of $10-12 billion would still indicate that India’s e-commerce poster boy is likely to witness a so-called “down round" when it next raises fresh capital, given that it last raised funds at a peak $15 billion valuation back in 2015.

And while the recent valuation markdowns from several mutual funds, including Fidelity Investments, Vanguard Group and T. Rowe Price, might not accurately reflect Flipkart’s exact current valuation, the markdowns in a way reflect the prevailing investor sentiment that most of India’s large, new-age Internet start-ups are overvalued.

Over the past 12 months, at least five mutual fund investors have marked down Flipkart’s valuation.

Flipkart, however, isn’t the only large Indian “unicorn" start-up facing a mark down in its valuation.

Earlier in February, Mint reported that Vanguard Group had slashed the valuation of its stake in India’s largest cab-hailing service Ola by more than 40%, pegging its valuation at about $3 billion, down from a peak valuation of $5 billion in 2015.

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