SoftBank Invests in India's Flipkart

by Frankie Norman August 12, 2017, 0:17
SoftBank Invests in India's Flipkart

The company was, until recently, leading talks for the sale of Snapdeal to Flipkart to salvage a part of its investment and, subsequently, invest fresh capital into Flipkart. Flipkart raised $1.4 billion from Tencent Holdings Ltd, eBay Inc. and Microsoft April.

For those left agog at the sheer magnitude of those figures, any surprise might be mitigated by the fact that Amazon, Flipkart's largest rival in India, has pledged to spend $5 billion on its efforts in the country over the next few years.

The funds will come from Softbank's $100 billion Vision Fund, which is the world' largest tech investment fund.

With the latest round, Flipkart has about $4 billion in cash reserves.

"SoftBank's proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor".

SoftBank CEO Masayoshi Son, an ambitious deal-maker, said earlier this week that he would "respect the decision" of Snapdeal's leadership but said he remained "engaged" with Flipkart. We want to support innovative companies because they are best positioned to leverage technology.

Binny Bansal and Sachin Bansal, Co-Founders of Flipkart, said in a statement: "This is a monumental deal for Flipkart and India". The fund is now headed by Softbank Group founder and CEO Masayoshi Son and India born Rajeev Misra, designated as CEO of SVF.

SoftBank's Vision Fund was launched in October 2016.

Softbank's funding will help Flipkart to hire more people in the field of research to develop future technologies to improve customer experience, and compete on a more level playing field with Amazon. Currently, SoftBank has an India portfolio spanning ecommerce, ride sharing, digital payments, hospitality, clean energy and telecommunications, which is valued at over $6 Bn. The Economic Times pegged the deal between $2.4 - $2.5 billion (around £19 billion).

Flipkart, which started by selling books on the Internet in 2007, was struggling to raise money until a year ago, hobbled by a tough private funding environment and shrinking valuations.

The recent capital infusion is the biggest funding in Indian startup space to-date. Flipkart now has a lot more cash to splash.

SoftBank in May had said the fund will target "meaningful, long-term" investments in companies that seek to enable the next age of innovation. Amazon Seller Services - the marketplace arm of Amazon India - posted revenues of Rs 2,275 crore in FY16, up 122%.

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