NEW DELHI (TIP): Flipkart has raised an estimated $2.5 billion from SoftBank Vision Fund, making the fund created by Japanese conglomerate SoftBank one of the biggest shareholders of India’s largest ecommerce player.
“This is the biggest ever private investment in an Indian technology company,” Flipkart said without disclosing the sum invested. The investment will make the $100 billion Vision Fund one of the largest shareholders in Flipkart, the e-tailer said.
People familiar with the deal said the investment is worth $2.5 billion, with about $1.5 billion being directly funneled into Flipkart and $1 billion for part of Tiger Global Management’s stake. The SoftBank Vision Fund, the world’s largest technology-focused fund, will get about 20% stake in Flipkart, they said.
The investment, which comes less than two weeks after Snapdeal dropped merger talks with its bigger rival, will swell Flipkart’s cash holdings to more than $4 billion. Snapdeal is backed by SoftBank.
The investment is part of the financing round announced in April this year where Tiger Global-backed Flipkart had raised $1.4 billion from Tencent, Microsoft and eBay. At that time, Flipkart was valued at $11.6 billion. With the latest funding, Flipkart is estimated to have raised well over $5 billion to date.
For Flipkart, the funding provides it with more arsenal to compete with Amazon. The two companies have been locked in an intense battle for leadership in the burgeoning Indian e-commerce market.
“India has a thriving internet market with close to 500 million internet users and as per market research, the Indian ecommerce market is expected to grow at a five-year CAGR in excess of 30%,” the statement said.
The funding round further solidifies Flipkart’s balance sheet and will help accelerate investment in driving continued market leadership, it added. Amazon and Flipkart have been pumping in millions of dollars to strengthen infrastructure as well as bring more sellers and buyers online.
While Flipkart has now raised close to $4 billion this year, Amazon pumped in about $600 million across various units in India since January this year.
“This is a monumental deal for Flipkart and India. Very few economies globally attract such overwhelming interest from top-tier investors,” Flipkart co-founders Binny Bansal and Sachin Bansal said.
Masayoshi Son, founder, Chairman and CEO of SoftBank Group Corp, said India is a land of vast opportunity. “We want to support innovative companies that are clear winners in India because they are best positioned to leverage technology and help people lead better lives. As the pioneers in Indian e-commerce, Flipkart is doing that every day,” he added. Source: PTI