Three years after its exit from Walmart owned Flipkart, SoftBank Group Corp is slated to re-invest in the online retailer as part of an upcoming funding round. The Japanese company’s Vision Fund 2 is in talks to make a primary capital investment of $700 million in the Bengaluru based company as part of an upcoming $1.2-$1.5 billion round, at least two people aware of the transaction told VCCircle.
The proposed transaction is expected to value Flipkart at $28 billion, one of the people aware of the development said, on the condition of anonymity. The transaction is slated to close in 3-4 months, the person added.
The deal, the second of the two people cited, said could be struck at a valuation of up to $30 billion, depending on the final set of investors who join the cap table. Prosus Ventures, the investing arm of South African conglomerate Naspers, and other existing investors could up their stake, the person said.
Singapore sovereign wealth fund GIC and Canadian pension fund CPPIB are also in talks to join this round, an Economic Times report from earlier this year. This was confirmed by one of the two people cited above.
Investment banks JP Morgan and Goldman Sachs are managing the sale transaction for Flipkart.
SoftBank and JP Morgan declined to comment. Flipkart, Goldman Sachs, Prosus, GIC and CPPIB did not immediately respond to a request for comment on Thursday evening.
This is SoftBank’s second coming in Flipkart after its exit from the ecommerce company in May 2018. For SoftBank, this deal is also happening at nearly twice the valuation at which it exited three years ago.
SoftBank’s first Vision Fund invested $2.5 billion in Flipkart in August 2017. Thereafter, the fund elected to fully exit its approximately 20% stake, within a year, after Walmart agreed to acquire a controlling stake in Flipkart in April 2018 for $16 billion. SoftBank sold its stake for $4 billion which brought the fund $1.5 billion in profits. But the exit required the Japanese investor to pay a steep 43% short term capital gains tax, for which the fund set aside $648 million at that point, according to media reports then.
The latest transaction is in the run up to Singapore-incorporated Flipkart’s eventual listing -- slated for 12-18 months down the line. The investors signing up on to the ongoing fundraise are hoping the listing will happen at a significant premium and fetch them a valuation of around $35bn to $40bn, one of the people cited above said. Flipkart is unlikely to raise another round ahead of its IPO, the people cited above said.
SoftBank Vision Fund 2 has made aggressive investments in India this year. It is set to invest in food delivery unicorn Swiggy, which would be its first bet in the foodtech space.
Swiggy rival Zomato recently filed its draft red herring prospectus ahead of a public market listing in India.
SoftBank’s investments in banking technology firm Zeta last month priced the firm at over $1bn. Its investment in OfBusiness is set to catapult the business-to-business marketplace also to the unicorn club.