Tiger Global has 15 percent share in Ola.
US-based investment firm Tiger Global Management has decided to sell parts its shares worth $1 billion that it invested in Indian taxi hiring app Ola and e-commerce giant Flipkart to Soft Bank, reported The Economic Times.
According to the paper, Tiger Global Management plans to sell shares amounting between $600 and $700 that it invested in Flipkart and close to $600 million stake it invested in Ola through a buyback.
Currently, Tiger Global has 15 percent share in Ola, which now values five times the company’s initial investment. From Flipkart shares, the New York-headquartered company will get three times the amount it invested.
Once the deal is sealed, Japanese investor SoftBank will own about one-third of Ola’s share and 20 percent in Flipkart, says the report.
Lee Fixel’s missteps to blame
“While the secondary sale by institutional shareholders in Flipkart is happening at a 30 percent discount, in Ola it is much lower at 10 percent,” said one of the persons familiar with the developments to Economic Times.
The latest move is expected to give a sense of relief to Lee Fixel, a partner at Tiger Global Management whose hasty decision to invest in a number of billion-dollar Indian startups proved costly. Under Fixel’s stewardship, Tiger Global had invested in 48 companies in India over the past decade.
Flipkart was Tiger Global’s most valuable assent in India
Flipkart was the Tiger Global’s most capricious bet in India since 2010, having made investments worth $1 billion over a number of years, each time investing a significantly higher amount.
There were reports that SoftBank was mulling to buy major stakes owned by Tiger Global for about $700 million. With many missteps taken in recent times, Tiger Global didn’t want its most precious and lucrative investment to remain in a risky state considering the influx of Amazon and Uber in the market.
The volatility of its stake in Flipkart had forced Tiger Global to go slow on future investments in India, both in new and portfolio companies. Since 2015, Tiger Global participated in the follow-on funding rounds of only two portfolio companies.