Published: Sat, August 12, 2017
Money | By Oscar Reynolds

SoftBank Vision Fund invests in Flipkart, becomes one of the largest shareholders

SoftBank Vision Fund invests in Flipkart, becomes one of the largest shareholders

Earlier there were speculations that Softbank would invest in Flipkart with the only condition of Flipkart acquiring Snapdeal, however, after last week's development of Snapdeal deciding to go ahead alone, there were doubts over this deal.

SoftBank, the biggest investor in India's leading cab hailing service Ola and top hotel aggregator Oyo, is keen to play a more active role in the country's e-commerce sector which is expected to drive sales upwards of US$35bil (RM150.3bil) by 2020.

Flush with funds, Flipkart can now up the ante in the high-stakes battle against Amazon India in what is probably the world's fastest growing e-commerce market. After this financing round, Flipkart will have in excess of $4 billion of cash on its balance sheet.

The investment also needs to be seen in view of the appeal of the burgeoning Indian e-commerce market. "SoftBank's proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor", the co-founders said in the statement.

With this investment, Flipkart has now raised approximately $8 billion via 14 rounds.

The move is interesting because in 2011, Flipkart wanted to rope in SoftBank as an investor, which would have cost Masayoshi Son, founder and chairman & CEO of SoftBank Group Corp, a few hundred million, rather than billions, for a similar stake. "As the leader of the Indian e-commerce, the onus is on us to make its benefits reach the farthest corners of India", said Flipkart's Binny Bansal. The fund is now headed by Softbank Group founder and CEO Masayoshi Son and India born Rajeev Misra, designated as CEO of SVF.

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. Softbank has infused $2.5 billion at a time when the prime festive seasons is about to start with Dussera within a month, Diwali after two weeks, and then Christmas and New Year.

Flipkart, which started by selling books on the Internet in 2007, was struggling to raise money until past year, hobbled by a tough private funding environment and shrinking valuations. Flipkart not only managed to bypass Snapdeal, it also managed to clinch capital and the strategic backing of SoftBank.

After the latest round, Flipkart has raised more than $6 billion in cash since starting out in 2007.

Amazon, on the other hand, has been bullish on its plans for India.

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