Flip­kart’s Cash Re­serves Top $4 B

The Economic Times - - Com­pa­nies & Econ­omy -

Flip­kart’s co­founders — IIT-Delhi class­mates who teamed up in 2007 to sell books on­line — have, in a decade, built a com­pany that was val­ued at about $11.6 bil­lion in April 2017 when it raised $1.4 bil­lion in fund­ing from eBay, China’s Ten­cent and Mi­crosoft. The SoftBank in­vest­ment is a con­tin­u­a­tion of that fund­ing round.

“We are 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,” the founders said in a state­ment. Sachin Bansal is the ex­ec­u­tive chair­man of the com­pany while Binny Bansal is the group chief ex­ec­u­tive of­fi­cer. The two are not re­lated to each other.

Flip­kart de­clined to com­ment on de­tails of the sec­ondary share sale that forms a part of the cur­rent in­vest­ment round. For SoftBank, this deal comes barely two weeks af­ter it failed to push through the sale of its port­fo­lio com­pany Snapdeal to Flip­kart.

“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 ecom­merce, Flip­kart is do­ing that ev­ery day,” SoftBank founder Masayoshi Son said in a state­ment.

This deal will take SoftBank’s to­tal in­vest­ment in In­dia to over $6 bil­lion. It re­cently pumped in $1.4 bil­lion in dig­i­tal pay­ments and com­merce firm Paytm at a val­u­a­tion of over $7 bil­lion and is the big­gest share­holder in In­dia’s largest ride hail­ing ap­pli­ca­tion Ola.

With this in­vest­ment, Flip­kart’s cash re­serves cross $4 bil­lion, al­low­ing the Ben­galuru-head­quar­tered on­line re­tail gi­ant to cre­ate a deeper moat, as it pre­pares to stave off stiff com­pe­ti­tion from Jeff Be­zos’ Ama­zon. The Amer­i­can com­pany has pulled out all stops to grab pole po­si­tion in In­dia’s dis­count-fu­elled, high- ly-at­tri­tional ecom­merce in­dus­try.

TIGER MAY HAVE EARNED $750-850 M

Be­zos has pledged to con­tinue plough­ing cap­i­tal into its do­mes­tic unit af­ter com­mit­ting up to $5 bil­lion last year.

“Over the past year, Flip­kart has not been as ag­gres­sive as Ama­zon in cat­e­gory ex­pan­sion, strength­en­ing sup­ply chain and in mar­ket­ing. This has helped Ama­zon get bet­ter brand re­call, wider cat­e­gory spread in terms of GMV and more ware­houses serv­ing more pin­codes,” said Anil Ku­mar, CEO of RedSeer Con­sult­ing. “Flip­kart can now use the new fund­ing on th­ese three fronts,” he added.

Flip­kart has now raised fi­nanc­ing of about $6 bil­lion since in­cep­tion. Gold­man Sachs acted as the fi­nan­cial ad­vi­sor to Flip­kart for the trans­ac­tion while SoftBank was rep­re­sented by Citi. The deal is also ex­pected to bring the Bansals back at the steer­ing wheel at the largest ecom­merce com­pany in In­dia, af­ter they moved away from daily op­er­a­tional roles when for­mer Tiger Global ex­ec­u­tive Kalyan Kr­ish­na­murthy took charge as chief ex­ec­u­tive in Jan­uary this year.

For SoftBank, this deal comes barely two weeks af­ter it failed to push through the sale of its port­fo­lio com­pany Snapdeal to Flip­kart

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