FDI tussle triggers debate arketplace definition Flipkart Snapdeal oppose opening up Indias ecommerc
BANGALORE: E-commerce juggernaut Flipkart has approached real estate developers for 1.5 million sq ft office space to consolidate its rapidly expanding operations in Bangalore.Flipkart needs 4 lakh sq ft soon and would opt for staggered occupation of the rest to become one of the top office space absorbers in the tech city turned startup capital in recent years, said people directly aware of the matter.
This will be the biggest office deal involving an internet company, and possibly the largest by a single occupant after Goldman Sachs mopped up 1.6 million sq ft in Bangalore two years ago.
The e-tailer's office leasing plans are aggressive but also reflect investor confidence in a seven-year-old company with breakneck growth plans, despite a running battle with Amazon. Flipkart, with a rocketing valuation of over $6 billion currently, could raise $3 billion in the next three years to lead India's internet consumerism.
Flipkart currently runs 12,000-staff operations from seven office buildings spread across the Koramangala suburb, from where Infosys started three-decades ago. The Sachin and Binny Bansal co-founded company is in discussions with southern real estate giant Embassy Group for an office space deal.
Embassy TechVillage, located in the city's IT corridor, is one of the identified locations. Flipkart's request for proposal is just out and discussions are still in early stages. The proposal has been floated with most of the city's big developers. The TechVillage has around 500,000 sq ft of space that is yet to be leased, and another 3 million going into development very soon.
Flipkart didn't respond to emailed queries. Top Embassy officials, travelling abroad, could not be reached immediately.
The e-commerce poster boy is raising $1 billion in the next few days from a consortium of investors led by US fund Tiger Global, which would invest over $250 million in the current round. Other existing investors, South African internet giant Naspers and Accel Partners, too, would participate along with a set of new marquee names.
The latest investment is happening at a valuation which has more than doubled in the last quarter, when Russian investor DST Global valued it at $2.8 billion.
"The growth spike in the past six months completely rearranged the prospects for most e-commerce players, and more so for Flipkart, which has grown even faster after Amazon entry," a source involved with the matter said. Flipkart said it would hire 12,000 people this year to bolster its support and technology operations, taking total roll call to 25,000.
The investor confidence is also running high on the fact that that Flipkart has halved its monthly losses from $5 million one year ago, as it bucks up efficiencies and taps better monetization of the delivery model. Tiger Global has invested more than $600 million in Flipkart and could take its exposure to $1 billion, surpassing what it invested in Facebook.
Bansals are accelerating growth fully knowing "there's scope to raise another $2 billion" in the next three years, a timeline by when the investors hope for a possible US listing at a valuation in excess of $20 billion, said a second source directly familiar with the developments. Flipkart has consistently said it has no readymade plans for an IPO as investors continue to pour money at valuations topping public markets, for now.