SoftBank invests at least $2.5 bn in Flipkart; biggest ever investment in Indian internet space

India’s largest Internet firm Flipkart Ltd has raised at least $2.5 billion from SoftBank Vision Fund, scaling up its firepower in the fight with arch rival Amazon India for dominance over India’s e-commerce market.

The latest round of funding takes Flipkart’s cash reserves to more than $4 billion. Flipkart didn’t disclose the amount, but said that the SoftBank investment comprises a mix of primary (investment in the company) and secondary capital (purchase of shares from existing shareholders).

SoftBank invested at least $2.5 billion in Flipkart, three people familiar with the matter said on condition of anonymity. Mint and other publications had reported for months that SoftBank would invest more than $1.5 billion in Flipkart by putting in fresh capital and buying shares from Tiger Global Management, Flipkart’s largest shareholder.

Flipkart has now raised more than $6 billion in cash since starting out in 2007, by far the highest by any Indian start-up and among the highest by any start-up globally. Flipkartraised $1.4 billion from Tencent Holdings Ltd, eBay Inc. and Microsoft Corp. in April.

The SoftBank investment comes after Flipkart’s proposed takeover of Snapdeal, the Japanese investor’s portfolio company, collapsed last week.

“This is a monumental deal for Flipkart and India. Very few economies globally attract such overwhelming interest from top-tier investors. It is recognition of India’s unparalleled potential to become a leader in technology and e-commerce on a massive scale. SoftBank’s proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor,” Flipkart co-founders Binny Bansal and Sachin Bansal said in a joint statement.

The investment will likely make SoftBank the largest investor in Flipkart and reduce the influence of Tiger Global, whose representative Kalyan Krishnamurthy is Flipkart’s CEO.

In the space of four months, SoftBank has struck two deals that have changed the dynamics of India’s Internet business and made the Japanese investor the most powerful and influential entity in the start-up ecosystem. In May, SoftBank, which is also the largest shareholder in cab hailing firm Ola, invested $1.4 billion in digital payments firm Paytm.

Already, some analysts and investors are saying that SoftBank may orchestrate a mega-merger between Paytm and Flipkart at some point in the future.

The SoftBank investment in Flipkart is part of the company’s latest financing round;

“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,” said Masayoshi Son, chairman and CEO of SoftBank Group Corp.

While expectations around the size of India’s e-commerce have significantly diminished from the heady estimates of 2015, it is still considered the last big e-commerce market left. Flipkart is the only local start-up that is seen as serious competition to Amazon India over the long term.

With its financing round in April and the latest SoftBank investment, Flipkart has settled the debate over its ability to take on Amazon. Its prospects have also lifted over the past nine months as it has seen a resurgence in sales

SDource:-livemint