Flipkart’s Cash Reserves Top $4 B
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.
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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