Bengaluru: India’s largest online retailer Flipkart is in talks for a mammoth fundraising of up to $1.5 billion from investors including Microsoft Corp., eBay Inc., PayPal Holdings Inc. and Tencent Holdings Ltd at a valuation of $10-12 billion, said three people familiar with the matter.

Flipkart has increased the size of its funding round after its turnaround under new chief executive Kalyan Krishnamurthy gathered steam since December, said the people cited above, asking not to be identified.

Flipkart, which also owns the fashion retailers Myntra and Jabong as well as payments app PhonePe, initially wanted to raise anywhere between $500 million and $1 billion but is now seeking up to $1.5 billion, they said.

Flipkart last raised funds more than 18 months ago when existing investors led by Tiger Global Management pumped $700 million into the company, valuing it at $15 billion. Flipkart has raised nearly $3.5 billion in cash over the past six years.

To be sure, the deal could collapse if investors do not agree with Flipkart’s valuation. Since February 2016, Flipkart investors including Morgan Stanley, Vanguard Group and T. Rowe Price Associates Inc. have marked down its valuation. The lowest of these estimates values Flipkart at just $5.54 billion. And at least five funds besides Wal-Mart Stores Inc., the world’s largest retailer, have walked away from discussions with Flipkart because of differences over valuation, the people cited above said.

Additionally, discussions with eBay are complicated because the company is also a strategic investor in Snapdeal (Jasper Infotech Pvt. Ltd), Flipkart’s smaller rival.

Recent developments have been encouraging for Flipkart, though.

Mint reported on 18 February that Flipkart sold a stake to media firm Bennett, Coleman and Co. Ltd (BCCL), publisher of The Times of India and The Economic Times newspapers, for Rs260 crore in December. That deal, which has an additional component of advertising space for Flipkart in BCCL’s media properties, valued Flipkart at roughly $15 billion, the three people cited above said. HT Media Ltd, publisher of Mint and Hindustan Times, competes with BCCL in some markets.

Flipkart has also seen a revival in sales under Krishnamurthy, who replaced Binny Bansal last month. Mint reported on 16 February that monthly sales over the past two months have increased sharply from the Rs2,000 crore levels they hovered around in the months before its Big Billion Day (BBD) sale in October, when it outsold arch-rival Amazon India in a surprise victory.

Amazon had overtaken Flipkart in terms of gross sales (on a standalone basis) in at least two months before the BBD and many investors believed the American company was running away with India’s $14-15 billion e-commerce market. However, Krishnamurthy, who rejoined Flipkart from Tiger Global last June, engineered a surprise turnaround driven by Flipkart’s smartphones category, which accounts for more than half of Flipkart’s sales. Now, there are early signs that Flipkart’s turnaround may last.

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