Softbank Vision Fund invests $2.5 bn in Flipkart

Marcus Newton
August 12, 2017

But SoftBank is also a stakeholder in digital payments-focused Paytm, investing $1.4 billion in the company in May and further complicating dynamics within the sector. Tiger Global Management, one of the earliest backers of Flipkart, partially sold its stake to SoftBank. Both the companies have been locked in an intense battle for leadership in the fast-growing Indian e-commerce market.

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. This is the largest investment the SoftBank Group's IT venture has made in a private internet firm in India, according to the Business Standard. "We look forward to the results of the Snapdeal 2.0 strategy and to remain invested in the vibrant Indian e-commerce space", he said in a statement last month. Softbank has a record of partnering with cutting-edge technology companies and Flipkart is hopeful of a long term fruitful partnership with the investor. After this financing round, Flipkart will have in excess of $4 billion of cash on balance sheet. "In India, we want to support innovative companies that are clear winners because they are best positioned to leverage technology and help people lead better lives".

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Talking about the funding, Masayoshi Son, Founder and Chairman & CEO of SoftBank Group Corp said, "India is a land of vast opportunity".

Flipkart co-founders Binny Bansal and Sachin Bansal called the new funding from Soft Bank as a monumental deal for the company and India while saying that very few economies in the world attract such massive invest from top-tier investors. Citi served as financial advisor and AZB and Partners served as legal advisor to the SoftBank Vision Fund. Amazon's entry into India in 2013 had eroded Flipkart's cash further as it struggled to compete with the USA company offering steep discounts. This deal makes SoftBank one of the largest shareholder in Flipkart. Flipkart not only managed to bypass Snapdeal, it also managed to clinch capital and the strategic backing of SoftBank. The talks collapsed at the end of July, but multiple reports suggested SoftBank would participate in Flipkart's next funding round. Amazon Seller Services - the marketplace arm of Amazon India - posted revenues of Rs 2,275 crore in FY16, up 122%.

Other reports by MaliBehiribAe

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