This investment comes weeks after a possible deal between Flipkart and Snapdeal fell through. Flipkart raised $1.4 billion from Tencent Holdings Ltd, eBay Inc. and Microsoft Corp.in April. Tiger Global Management, one of the earliest backers of Flipkart, partially sold its stake to SoftBank.
SoftBank, the biggest investor in India's leading cab hailing service Ola and top hotel aggregator Oyo, is keen to play a more active role in the country's e-commerce sector which is expected to drive sales upwards of US$35bil (RM150.3bil) by 2020. Between them, Flipkart and Snapdeal account for more than 50% of the Indian online shopping market, though Amazon India is a growing rival.
Japanese telecom and investment giant Softbank just made sure Flipkart has plenty of cash to fight off Amazon's aggressive push into India.
This is an alpha moment not only for the e-commerce market, but also for the Indian tech ecosystem. While the amount invested is not clear, different sources in the industry peg the amount between $2.5-2.6 billion (Rs 16017.5 crore). "We're excited to welcome the Vision Fund as a long-term partner as we continue to build our business with a focus on serving the needs of all Indians, and driving the next phase of technology adoption in India".
According to investors and experts in the e-commerce ecosystem, the funding by Softbank in Flipkart paves way for a bigger consolidation and that India will not see a monopoly in the e-commerce market unlike China and the US.
"The Vision Fund is proud to be part of this landmark transaction which is a strong endorsement of India and its thriving economy", said Rajeev Misra, CEO of the Vision Fund. Completion of the investment is subject to customary regulatory approvals and closing conditions. SoftBank has an India portfolio spanning e-commerce, ride sharing, digital payments, hospitality, clean energy and telecommunications, which is valued at over $6 billion. The Economic Times pegged the deal between $2.4 - $2.5 billion (around £19 billion). Out of the total $1.9 Bn fundraise in these 55 deals Flipkart's earlier round contributed the most ($1.4 Bn). SoftBank is one of the lead investors in Snapdeal, though the day after Snapdeal announced that it terminated talks with Flipkart, it emerged that SoftBank was looking to invest in Flipkart.
This was especially significant as Flipkart is competing against the cash-rich Amazon.