Flipkart bags $2.5bn investment from SoftBank

Flipkart said the Soft Bank investment which is the biggest-ever private investment in an Indian technology company will make the Vision Fund one of the largest shareholders in the online retailer

The company had last raised about $1.5 billion from Microsoft, Tencent and Ebay in April and the fresh funding also gives a partial exit to Tiger Global, which was one of Flipkart's early and largest investors till April.

This investment comes weeks after a possible deal between Flipkart and Snapdeal fell through.

This is vital ammunition as it seeks to retain its market share lead over Amazon India, which has received capital commitments of $5bn from its U.S. parent.

Alibaba's sway over China's internet market spawned several other billion-dollar startups in that country, which effectively stalled the American conquest of the world's largest digital economy.

SoftBank was at the forefront to stitch up a deal between Flipkart and Snapdeal.com, owned by Jasper Infotech. "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.

SoftBank's Vision Fund, the world's largest private equity fund, will invest close to US$2.5bil (RM10.7bil) in Flipkart via primary and secondary share purchases, two sources familiar with the matter told Reuters.




SoftBank Vision Fund, founded by SoftBank Group Chairman Masayoshi Son, operates as a separate entity. 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. "Harish HV, partner, Grant Thorton, believes the infusion is a vote of confidence for the Indian e-commerce industry".

Over the past year, analysts in the market were feeling that Flipkart had run out of steam due to lack of funds from its investors. Both the companies have been locked in an intense battle for leadership in the fast-growing Indian e-commerce market.

An acquisition in these verticals will solve the difficulty of building a supply chain for these specialised categories, "To match up, Flipkart will have to invest at least as much as Amazon, and grocery will be important to increase wallet share", said Satish Meena, senior forecast analyst at Forrester.

SoftBank in May had said the fund will target "meaningful, long-term" investments in companies that seek to enable the next age of innovation. The talks collapsed at the end of July, but multiple reports suggested SoftBank would participate in Flipkart's next funding round.

This was especially significant as Flipkart is competing against the cash-rich Amazon.

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