SoftBank to in­vest $2.5bn in Flip­kart

The Star Early Edition - - INTERNATIONAL - Saritha Rai

SOFTBANK Vi­sion Fund will in­vest about $2.5 bil­lion (R33.58bn) in Flip­kart Group, swelling the In­dian e-com­merce play­ers’ cash hoard as it vies with Ama­zon.com, peo­ple fa­mil­iar with the mat­ter said.

The in­vest­ment in­cludes ap­prox­i­mately $1.5bn di­rectly into Flip­kart and $1bn for part of Tiger Global Man­age­ment’s stake, the peo­ple said, ask­ing not to be iden­ti­fied dis­cussing the de­tails. The deal will make the fund cre­ated by SoftBank Group chair­per­son Masayoshi Son the big­gest share­holder of Flip­kart, the peo­ple said. Flip­kart an­nounced the fund’s in­vest­ment ear­lier with­out re­veal­ing an amount.

The in­vest­ment swells Flip­kart’s cash hold­ings to more than $4bn and comes less than two weeks af­ter Snapdeal, backed by SoftBank it­self, walked away from a pro­posed merger with Flip­kart. Ama­zon founder Jeff Be­zos has vowed to spend $5bn in In­dia to gain cus­tomers in a mar­ket with 500 mil­lion in­ter­net users where e-com­merce is ex­pected to grow at 30 per­cent an­nu­ally over five years.

“This kind of fund­ing can help Flip­kart match Ama­zon’s spend­ing dol­lar-to-dol­lar for the next three to four years,” said Satish Meena, the Del­hibased se­nior fore­cast an­a­lyst at For­rester. “Af­ter the Snapdeal merger back­fired, SoftBank re­ally had only one e-com­merce in­vest­ment op­tion in In­dia: Flip­kart.”

SoftBank’s in­vest­ment is part of a pre­vi­ously an­nounced fi­nanc­ing that drew cap­i­tal from Ten­cent Hold­ings, EBay and Mi­crosoft and val­ued Flip­kart at $11.6bn.

The deal ef­fec­tively means In­dia will be­come a bat­tle­ground with Ama­zon on one side and ev­ery­one else on the other to make it harder for Be­zos to reach the top po­si­tion in the coun­try, Meena said. The In­dian com­pany will need to fig­ure out how to hold on to con­sumers.

“This is a mon­u­men­tal deal for Flip­kart and In­dia. Very few economies glob­ally at­tract such over­whelm­ing in­ter­est from top-tier in­vestors,” Binny Bansal and Sachin Bansal, co-founders of Flip­kart, said.

The in­vest­ment is the big­gest ven­ture deal in In­dia, the peo­ple fa­mil­iar said.

SoftBank, which holds al­most a third of Snapdeal shares, and Tiger Global had been push­ing the pro­posed merger with Flip­kart to cre­ate a stronger com­peti­tor to Ama­zon. That deal fell apart af­ter Snapdeal’s founders raised ob­jec­tions. – Bloomberg

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