News Worms
News Worms


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

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

Primary capital is the investment directly made into the company, whereas, the secondary capital is buying shares from existing stakeholders.Though Flipkart did not confirm the amount invested, Mint quoted 3 people directly aware of the development. But it's also the majority shareholder in Flipkart's biggest rival, Snapdeal, which has 14% of the market. The fund raise eclipses the highs set by Flipkart and Paytm when they both raised $1.4 billion earlier this year.

This investment assumes significance as SoftBank-backed Snapdeal last month called off merger talks with Flipkart. This was because Softbank was really keen to merge Snapdeal with Flipkart, and to consolidate their investments for a larger battle with Amazon. Estimates suggest that the company has already invested over United States dollars 2 billion in the last few quarters in the Indian market.

Goldman Sachs and Citi advised Flipkart and SoftBank Vision Fund, respectively on the investment deal. "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.

For Flipkart, which has the backing of investors including China's Tencent Holdings and USA eBay Inc., the deal offers a much-needed ammunition to fend off the biting competition from rival Amazon.com. Citi served as financial advisor and AZB & Partners served as legal advisor to the SoftBank Vision Fund. Current Flipkart CEO Kalyan Krishnamurthy is Tiger Global's representative in the e-commerce major, but his position will come into jeopardy.

Talking about the funding, Masayoshi Son, Founder and Chairman & CEO of SoftBank Group Corp said, "India is a land of vast opportunity". "We want to support innovative companies that are clear winners in India". The funds would help accelerate investment in driving continued market leadership, Flipkart said in a statement. With razor-sharp execution, we must continue to transform commerce in India through technology and India-specific innovations. Amazon's entry into India in 2013 had eroded Flipkart's cash further as it struggled to compete with the USA company offering steep discounts. While Amazon's Jeff Bezos has committed $5 billion to the Indian business, Flipkart now has $4 billion in the bank after Japanese investor SoftBank's infusion of close to $2.5 billion. In January 2017, it was reported that SoftBank Capital, will facilitate its investments in India via its $100 Bn tech focussed fund, Vision Fund.

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