In what is being dubbed as the biggest-ever private investment in an Indian technology company, Japan's SoftBank Group Corp is learnt to have invested $2.4 billion (Rs 15,300 crore) in e-commerce major Flipkart via its $93-billion Vision Fund.
People close to the development told VCCircle that with this investment, SoftBank will own a 20% stake in the company.
The infusion of fresh funds is expected to help Flipkart solidify its position as the market leader, at least in the short term, keeping Amazon and other rivals at bay. Amazon has previously committed to invest $5 billion in India.
The investment, a mix of primary and secondary capital, will make Vision Fund one of the company’s largest shareholders, Flipkart said in a statement.
“We want to support innovative companies that are clear winners in India because they are best positioned to leverage technology. As the pioneers in Indian e-commerce, Flipkart is doing that every day,” said Masayoshi Son, founder and CEO, SoftBank.
Flipkart said the investment was part of a recent financing round where it raised $1.4 billion (Rs 9,000 crore) from Chinese Internet giant Tencent Holdings Ltd, US online retailer eBay and software giant Microsoft Corp. Following this investment, Flipkart will have more than $4 billion cash on its balance sheet, it said.
Since the investment is an extension of the last round, it values Flipkart at $11.6 billion, down about a fourth from its $15.2-billion peak valuation in 2015.
Late last month, however, a mutual fund managed by US-based investment firm Vanguard Group marked up the value of its stake in Flipkart. After the markup, Flipkart’s valuation is about $13.7 billion.
“This is a monumental deal for Flipkart and India. Very few economies globally attract such overwhelming interest from top-tier investors...SoftBank’s proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor,” Binny Bansal and Sachin Bansal, co-founders of Flipkart, said.
The addition of $2.4 billion takes the total amount the company has raised so far to $7.4 billion, the maximum amount mobilised by any domestic online platform.
SoftBank had been trying to orchestrate a merger between Snapdeal and Flipkart for nearly six months. On July 31, however, Snapdeal announced its decision to call off the negotiations and go solo by tweaking its business model to a pure-play marketplace.
SoftBank, which was looking to acquire a stake in Flipkart through the planned merger, had said in a statement that it “respects the decision to steer the company in a different direction”. Soon after the merger talks fell through, it was reported that the Japanese telecom and Internet conglomerate was in talks to invest in Flipkart through its Vision Fund.
Flipkart had acquired the Indian operations of eBay Inc. as part of the $1.4-billion investment in April. It concluded the merger earlier this month and appointed its head of marketplace Anil Goteti to lead eBay India.
The Flipkart Group includes online fashion and lifestyle brands Myntra and Jabong, digital payments entity PhonePe, supply chain and logistics wing Ekart and e-commerce marketplace eBay.in besides the parent company.
SoftBank’s India investment portfolio is valued at over $6 billion with investments in online grocer Grofers and cab-hailing firm Ola, besides other investments in digital payments, hospitality, clean energy and telecommunications.
Flipkart’s other major investors include Tiger Global, Naspers Group, Accel Partners and DST Global.