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Published: Sat, August 12, 2017
Economy | By Melissa Porter

With new investment, SoftBank now among largest stakeholders in Flipkart

With new investment, SoftBank now among largest stakeholders in Flipkart

The latest announcement comes just days after SoftBank failed to merge Snapdeal, where it was the largest investor, with Flipkart. The fund raise eclipses the highs set by Flipkart and Paytm when they both raised $1.4 billion earlier this year. Tiger Global Management, one of the earliest backers of Flipkart, partially sold its stake to SoftBank.

"This investment will accelerate the growth of the e-commerce industry in India as the top player will have more ammunition and can thus turn on the growth/acquisition engine, pushing the competition to up the ante".

Experts tracking the sector believe that apart from a push to increase its dominance in the fashion category through infusion into group company Myntra, Flipkart will also increase its investment in building strong private labels with an eye on improving gross margins. Current Flipkart CEO Kalyan Krishnamurthy is Tiger Global's representative in the e-commerce major, but his position will come into jeopardy. Softbank has a record of partnering with cutting-edge technology companies and Flipkart is hopeful of a long term fruitful partnership with the investor. Flipkart will now be valued at $14.2 billion, sources said. "We want to support innovative companies that are clear winners in India". "We're excited to welcome the Vision Fund as a long-term partner as we continue to build our business with a focus on serving the needs of all Indians, and driving the next phase of technology adoption in India", they added.

SoftBank's Vision Fund was launched in October 2016.

"The Vision Fund is proud to be part of this landmark transaction which is a strong endorsement of India and its thriving economy", said Rajeev Misra, CEO of the Vision Fund. Completion of the investment is subject to customary regulatory approvals and closing conditions.

Softbank's funding will help Flipkart to hire more people in the field of research to develop future technologies to improve customer experience, and compete on a more level playing field with Amazon. Till date, Flipkart has raised about $4.6 Bn funding in 14 rounds, excluding the current round. Flipkart not only managed to bypass Snapdeal, it also managed to clinch capital and the strategic backing of SoftBank. Consumers can now expect a lot more fireworks, because Amazon will have to match every offer made by Flipkart. Amazon Seller Services - the marketplace arm of Amazon India - posted revenues of Rs 2,275 crore in FY16, up 122%.

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