Investment banking firm Morgan Stanley’s $2 billion Small Company Growth Fund has invested nearly $50 million in Indian eCommerce firm Flipkart, that’s 3% of the fund’s assets, disclosures show. The fund invests about 5% of the its assets in pre-IPO companies, as per Reuters.
“We’re seeing more activity in the private market over the past few years as companies delay their IPOs and stay private longer,” said Katie Reichart, an analyst at fund research firm Morningstar Inc. “It can be a big boost if they get in early. Mutual fund managers don’t want to miss out on that runway to growth.”
The Fund run by Boston-based Fidelity Investments, Baltimore’s T. Rowe Price Group, and Morgan Stanley’s investment management arm, more than doubled the trio’s money with a number of pre-IPO bets, for example Facebook. The fund had also been used to make an investment in Twitter when it was a private company. Twitter went for an IPO in 2013, helping Morgan Stanley’s Small Growth Company portfolio to generate a 62% return for investors that year.
In May, Flipkart raised $550 million from some of its existing investors, in a deal that now values the company at about $15 billion. The round was led by US-based Tiger Global Management. Additionally, in the same month there was a news that the company plans to raise debt funding by selling Rupee bonds worth Rs 3,000 crore.
The current scenario evokes a very seminal question with regard to Flipkart’s IPO plans. The aforementioned mega investment secured by Flipkart from Tiger Global and others last month, was rumoured to be the eCommerce company’s penultimate fund raise. And now, given the fact that Morgan Stanley’s Small Company Growth Fund is dedicated to investing in pre-IPO companies, one is compelled to ask, ‘is Flipkart going for IPO soon?’