SoftBank invests at least $2.5 bn in Flipkart
The largest Internet firm in India, Flipkart Ltd has raised a fresh round of capital from SoftBank Vision Fund; the amount is estimated to be around $2.5 bn, which has increased the company’s cash reserves to more than $4 billion. This will help the company in its battle against Amazon India. Flipkart has not disclosed the amount yet but said that the investment from SoftBank comprises mainly of a primary and secondary capital, which is investment in the company and purchase of the shares from existing shareholders, respectively. With the increasing competition across the online marketplace, this investment comes as a huge move for Flipkart who will be able to make use of the cash reserves for the coming festive season.
SoftBank was expected to invest more than $1.5 billion in Flipkart in the form of fresh capital and the purchase of shares from Tiger Global Management, which is Flipkart’s largest shareholder. This investment comes after the proposed takeover of Snapdeal which collapsed a week back. The founders of Flipkart mentioned that this can be considered a monumental deal for Flipkart and India. Very few companies are able to attract such an overwhelming interest from the top tier investors. It is also recognition of India’s unparalleled potential to become a world leader in technology and e-commerce on a large scale. SoftBank has a proven track record of partnering with transformative technology leaders which has earned it the reputation of being a visionary investor.
Flipkart mentioned that this investment, which is the biggest ever private investment in an Indian technology company, will make the Vision Fund, one of the biggest shareholders in the online retail market. The investment is a part of the latest financing round in Flipkart which raised $1.4 billion from eBay, Microsoft and Tencent in April.
SoftBank aims to provide financial support to innovative companies that are clear winners in the country. This investment is likely to make SoftBank the largest investor in Flipkart. After the fall out of the proposed merger between Snapdeal and Flipkart, this deal comes as a huge boost to Flipkart who is constantly competing with the arch rival, Amazon.