Flipkart gets fortified by Softbank's $2.5bn, biggest private investment in Indian tech company

Flipkart has raised an estimated USD 2.5 billion (Rs from 16,000 crore) from Japan's SoftBank group in what is seen as the biggest ever private investment in an Indian technology company.

The investment, a mix of primary and secondary capital, will make Vision Fund one of the company's largest shareholders, Flipkart said in a statement which did not disclose the amount of the investment.

Analysts in the know of the deal said the investment is worth USD 2.5 billion, with about USD 1.5 billion being directly pumped into Flipkart and USD 1 billion for part of Tiger Global Management's stake.

The $100 billion SoftBank Vision Fund, which is the world's largest technology-focused fund, will get about 20 per cent stake in Flipkart, they said.

Flipkart said the investment was part of a recent financing round where it raised USD1.4 billion (Rs 9,000 crore) from Chinese Internet giant Tencent Holdings Ltd, US online retailer eBay and global software giant Microsoft.

Following this investment, Flipkart will have more than $4 billion cash on its balance sheet, the company said.

Since the investment is an extension of the last round, it values Flipkart at $11.6 billion, down by about onefourth from its $15.2-billion peak valuation in 2015.

"This is a monumental deal for Flipkart and India. Very few economies globally attract such overwhelming interest from toptier investors. SoftBank's proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor," Binny Bansal and Sachin Bansal, cofounders of Flipkart, said.

The addition of $2.4 billion takes the total amount the company has raised so far to $7.4 billion, the maximum amount mobilised by any domestic online platform. The investment, which comes less than two weeks after Snapdeal dropped talks for a merger with Flipkart that was being engineered by Softbank.

The discussions were terminated after the smaller rival decided to pursue an independent path. Sources had said SoftBank was keen to pick up stake in Flipkart and was looking at investing about USD 2 billion. Flipkart, now has more financial resources to compete with arch rival Amazon.
The two companies have been locked in an intense battle for leadership in the fast-growing Indian ecommerce market.

India has a thriving Internet market with close to 500 million Internet users and as per market research, the Indian e-commerce market is expected to grow at a five-year CAGR in excess of 30 per cent, the statement said.

The funding round further solidifies Flipkart's balance sheet and will help accelerate investment in driving continued market leadership, it added. Amazon and Flipkart have been pumping in millions of dollars to strengthen infrastructure as well as bring more sellers and buyers online.