The online retailer now has $4 billion in cash on its balance sheet.
After a failed attempt to merge Snapdeal with Flipkart, Japan’s SoftBank has invested a massive $2-2.5 billion in Flipkart. This makes SoftBank the largest shareholder in India’s leading e-commerce company. Formerly, Tiger Global held a majority stake in Flipkart. Earlier in the year, China’s Tencent (which backs Alibaba) and Microsoft had led a $1.4 billion funding round in Flipkart. SoftBank’s investment in Flipkart is a record for the Indian startup industry, and makes it clear that the Masayoshi Son-owned firm wants to recover lost ground.
Flipkart announced that it now has $4 billion in cash on its balance sheet. The SoftBank investment comes through the $100 billion Vision Fund — a technology-focused fund that backs startups in emerging economies. “This is a monumental deal for Flipkart and India. Very few economies globally attract such overwhelming interest from top-tier investors. It is recognition of India’s unparalleled potential to become a leader in technology and e-commerce on a massive scale,” Flipkart founders Sachin Bansal and Binny Bansal said in a statement. ALSO READ: Flipkart completes eBay India acquisition; will run it as an independent company
This announcement comes just days after Flipkart completed the acquisition of eBay.in. The San Jose-headquartered online marketplace sold its India business to Flipkart after more than a decade of struggles. eBay has also picked up a minority stake in Flipkart through a $500 million cash investment. eBay India is now a Flipkart-owned company much like Myntra and Jabong — fashion e-tailers that Flipkart has acquired over the years — are. However, it will continue to exist as an independent brand. Flipkart, now valued at $11.5 billion, is flush with funds and ready to take on the Amazon juggernaut.
The Seattle-based retail giant has pumped in close to $5 billion in its India operations till date and Jeff Bezos has promised more. India is among Amazon’s top markets globally, and particularly in Asia where it has had to contend with Chinese internet giant Alibaba (that counted SoftBank among its initial investors). Amazon India is now the second-largest online retailer and is narrowing its gap with market leader, Flipkart. Its meteoric rise has disturbed the pecking order in Indian e-commerce, and is largely responsible for fading popularity of Snapdeal (which was up for sale until recently). ALSO READ: Timeline: eBay India’s 13-year journey has been dotted with highs and lows
For SoftBank, this is a key investment. The Japanese behemoth has recorded a $1.4 billion loss from its India investments so far. After being locked in a boardroom battle with Snapdeal for over six months, SoftBank eventually failed to sell it to Flipkart. However, it quickly looked ahead. “India is a land of vast opportunity. 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 pioneers in Indian e-commerce, Flipkart is doing that every day,” Masayoshi Son, Founder & CEO of SoftBank, said in a statement.