Fair Valuation of an Online Retailer for a leading Hedge Fund

Our client (Client) is a leading India-focused hedge fund making concentrated long-term investments across diverse sectors. As part of their portfolio, they have multiple investments in Indian e-commerce, including India’s largest online retail marketplace.

The Client engaged Nexdigm to determine the fair market value of their investment in the said e-commerce company for the purpose of financial reporting.

• Phase I -Research
  We started with a preliminary understanding of the industry by referring to proprietary databases and research reports. An analysis of the historical and projected mix of online and offline business in the Indian retail industry was carried out.
• Phase II –Preparing Valuation Models
  As is the case with fair market valuation for financial reporting; the possibility of applying Price of Recent Investment (PORI) methodology to value the investments was first evaluated, but found unsuitable due to a change in business dynamics since the last funding round and lower growth (compared to expectations).

After reconciling the valuations under the various methods, Nexdigm concluded that the CCM method using the EV to Stabilized GMV multiple was most suitable to arrive at the fair market value. We presented our findings along with the valuation conclusion to the Client in a detailed valuation report.

Nexdigm’s passion, commitment and innovation, enabled us to develop a strong partnership with the Client based on trust and reliability.