Myntra overlooks Flipkart offer, opts to raise funds

While the e-tailing industry was expecting the emergence of a strong leader if the merger

deal between Flipkart and Myntra got through, the latter has opted out. Rather it is said to be going for a fund raising deal with PremjiInvest. Led by Wipro boss Azim Premji, PremjiInvest will pump in about 50 million dollars (over Rs 3,000 crores) in the leading Bangalore-based lifestyle and fashion retailer.

As per media reports, after Myntra conveyed their decision to go with fund raising option, PremjiInvest is finalizing the deal documents. Existing investors Tiger, Accel, IDG Venture and Kalaari Capital will also be a part of the latest round of funding but will see some stake dilution. For instance, Tiger Global and Accel Partners’ combined stake of about 53 percent will now fall below 50 percent with the Premji consortium stepping in.

The common element between Flipkart and Myntra was US hedge fund Tiger Global and venture capital firm Accel Partners holding significant shares in both the companies. Sources say that they suggested Myntra go for a merger deal. Tiger and Accel together own 53 percent shares, while IDG Ventures and Kalaari have a combined stake of 28 percent in Myntra. In Flipkart, the two common investors (Tiger & Accel) together hold around 40 percent stake.

Myntra had sales worth Rs 212.4 crores in fiscal 2013 when it reported a loss of Rs 134.7 crores after tax. The company, which reported its best ever monthly sales of 14 million dollars (over Rs 87 crores) in December last year, is looking forward to register a turnover of Rs 800 crores in fiscal 2014 and expects to turn profitable by the end of this year.