SoftBank is omnipresent in the Indian startup ecosystem after having cut deals with the biggest firms, viz. Flipkart, Paytm, Ola, and more. In August, it led a primary fund infusion of over $2 billion in Flipkart. And as per the deal, it was slated to raise its stake in the e-retailer by buying shares worth $1.2-$1.4 billion from Flipkart’s existing shareholders that include top private equity firm Tiger Global. Reports claim that SoftBank’s offer price of $85-89 per share would end up lowering Flipkart’s valuation to about $10 billion.
The Bengaluru-based firm was valued at $11.5 billion during its last fund-raise, which saw investments from Microsoft, Tencent, and eBay (whose India arm was bought over by Flipkart) besides SoftBank. That itself was lower than Flipkart’s peak valuation of $15 billion in April 2015. Despite its valuation registering a drop in the last two years, it continues to be India’s most valuable startup, and also the world’s third-most funded startup. It trails only China’s Didi Chuxing and America’s Uber – both ride-hailing companies that count SoftBank as an investor – in terms of capital raised.
Flipkart’s share sale to SoftBank is likely to completed in December, and it would lower Tiger Global’s stake in the e-commerce firm to about 20 percent. Tiger Global alone is expected to sell Flipkart shares worth $700 million to SoftBank. The other investors participating in the share sale include Accel Partners (Flipkart’s first institutional backer), Kalaari Capital (which failed to sell its largest investee firm Snapdeal earlier this year), IDG Ventures and others. Interestingly, Tiger Global is also engineering a billion-dollar share sale to SoftBank in ride-hailing firm Ola. The Japanese investor along with China’s Tencent had pumped in $1 billion in Ola in October.
In the initial years of the Indian startup boom, Tiger Global had been a key backer of the marquee firms. In the second decade of the startup economy, SoftBank has taken over that mantle. In less than a year, SoftBank Vision Fund has invested more than $6 billion in leading domestic startups – brokering partnerships, lowering the stake of former investors, giving them exits, as well as lending credibility to several operations with much-respected Japanese capital. Flipkart has been a big beneficiary and is now armed with $4 billion in cash to take on the Amazon India juggernaut.