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India competition watchdog approves SoftBank-Flipkart, Alibaba-BigBasket deals

14 December, 2017

The Competition Commission of India (CCI) has cleared SoftBank Group Corp’s purchase of a minority holding in Flipkart and Alibaba Group’s acquisition of a stake in online grocer BigBasket, two of the most significant investment deals in the Indian e-commerce ecosystem this year.

The development comes a month after VCCircle reported that Alibaba had sought the CCI’s nod to buy a stake in BigBasket. Separately, VCCircle had reported late last month that SoftBank had also applied to the CCI for approval to purchase a stake in Flipkart.

The competition watchdog approved the two deals sometime this week, though the exact date is not clear.

Email queries to both Flipkart and SoftBank did not immediately elicit a response. Phone calls, text messages and an email query sent to Hari Menon, the CEO of BigBasket, did not elicit any immediate response either.

SoftBank-Flipkart
Japanese telecom and Internet conglomerate SoftBank is buying a 20% stake in Flipkart through a mix of both primary share purchase and secondary transactions.

VCCircle had previously reported that about $1 billion of SoftBank’s $2.5 billion investment in Flipkart is believed to be by way of a secondary share purchase from early investors Tiger Global and Accel.

Following the CCI’s nod, SoftBank is likely to become the single-largest shareholder in Flipkart, toppling Tiger Global, which had invested more than $1 billion in the online retailer and has been looking for an exit.

SoftBank is also a large shareholder in e-commerce company Paytm and cab aggregator Ola.

Another secondary sale transaction involving SoftBank and Tiger Global is in progress. SoftBank is buying a portion of Tiger’s shares in Ola, upping its holding in the cab aggregator from 24% to around 30%. SoftBank, Tiger Global and Ola have agreed on the transaction in principle, and a formal process will soon be initiated.

Alibaba-BigBasket
Chinese e-commerce giant Alibaba’s proposed investment in BigBasket will help the online grocer consolidate its pole position in the segment. It will also give the Alibaba-Paytm combine a toehold in the e-grocery sector; Alibaba is already a significant shareholder in Paytm.

While VCCircle had reported in September that the deal was all but done, the deal size has been the subject of speculation.

In September, news website The Ken had reported that BigBasket had secured $280 million in a Series E round from existing investors Sands Capital and Dubai-based Abraaj Group, besides new investors Paytm Mall and Alibaba Group. However, earlier this month, The Economic Times had reported, citing unnamed sources, that Alibaba was set to put in $300 million for a 35-40% stake in BigBasket, translating into a post-money valuation of $850 million.

Alibaba’s backing will also give BigBasket the much-needed firepower to fight Amazon. The Seattle-based e-tailing giant recently got regulatory approval to set up a retail unit in the country to sell private food labels. Amazon has committed $500 million over the next two-three years towards this food retail unit.

However, BigBasket might face another formidable foe in Flipkart, which announced its second innings in the segment through a soft launch of its grocery delivery service Supermart last month.

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India competition watchdog approves SoftBank-Flipkart, Alibaba-BigBasket deals

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