Anyone familiar with the Indian startup circuit would know of Tiger Global, and be acquainted with the influence it has wielded over e-commerce companies. One of America’s most illustrious private equity firms, it has been an early investor in several Indian unicorns from Flipkart to Ola. Its capital (over $2 billion in a decade) has helped these firms reach the scale at which they operate today.
While investor exits have been tough to come about so far, Tiger Global is gearing up for a massive $1-1.5 billion departure from Ola and Flipkart as other large investors take over, according to reports. Japan’s SoftBank, and China’s Tencent have infused significant capital into leading Indian startups this year. Flipkart, Paytm and Ola standout among them, and both investors cumulatively hold close to 50 percent of these companies.
After a share sale, Tiger Global is likely to earn about three times its investment in Flipkart and nearly five times that in Ola. Its chief Lee Fixel recently relinquished his board seat in Ola, according to filings with the Ministry of Corporate Affairs. Following SoftBank’s and Tencent’s billion-dollar fund infusion in Ola, Tiger Global was reduced to a minority shareholder in the cab aggregator. Fixel, meanwhile, also serves on Flipkart’s board of directors.
Reports suggest that Tiger Global would sell an estimated $600-700 million worth of shares in Flipkart through a buyback. In Ola, it would divest half of its 15 percent stake that is worth $600 million given the startup’s valuation. “At the size, it’s a respectable exit, and Fixel has had a better hit rate than a lot of others [Indian venture capital investors],” an investor was quoted as saying.
Tiger Global, which was founded in 2001, manages $10 billion in private equity/venture capital and $10 million in publicly traded equities globally. US, China and India are its key investment markets. It entered India in 2007 (the year Flipkart was founded) with a $11.3 million infusion in Just Dial — a hyperlocal search services provider. It exited the startup in 2015 and earned $64 million, which is close to six times its initial investment.
Tiger Global invested in Flipkart in 2009 when it was just an online bookstore. In the years that followed, it became Flipkart’s largest shareholder. Until the recent funding by SoftBank, Microsoft and eBay, Tiger Global held a 28 percent stake in Flipkart. By 2015, it had invested over a $1 billion in the online retailer. That same year, Tiger Global funded nearly 40 startups in India, with each investment amounting to at least $5 million.
And one of them was Ola, in which Tiger Global held over a 20 percent stake until last year. Ola recently divested 9.75 percent of its stake to Tencent and SoftBank in exchange of $1.1 billion, thus lowering Tiger Global’s share. Some reports have hinted that it could sell its remaining stake in the ride-sharing company to SoftBank. And that would eventually lead to a merger between Ola and Uber (in which SoftBank is closing a massive $10 billion funding) in India. Interesting times ahead!