SoftBank has finally confirmed that it will sell the entire stake of 23.6% in Flipkart to Walmart. It was examining the tax burdens after selling the stake in Flipkart. After the deal was sealed, SoftBank found itself in a tight spot and was looking for options to exit as well as to stay in Flipkart. The reason behind the same was a hefty tax burden which the short term exit would attract for SoftBank.
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A major shareholder in Flipkart, SoftBank had a 23.6% stake which is purchased for $2.5 billion last year. It had 10 days to decide whether to sell or not to sell the stake and if yes, how much to sell. They were also suggested that it might like to stay in the Indian e-commerce company and become the second largest stakeholder following the acquisition by Walmart. Recently, SoftBank’s position has been a subject of wide speculation. Walmart had claimed that even if SoftBank decided against selling the stake, the decision would not make any difference to its plans to the e-commerce giant. Other investors including Naspers, eBay and Accel Partners had agreed to sell their shares after the deal. Binny Bansal, co-founder of Flipkart, Tencent Holdings Ltd and Tiger Global Management LLC and Microsoft Corp had continued being investors in the e-commerce giant. Global investors like T Rowe Price, Morgan Stanley, Iconiq Capital and Vulcan Capital have also been impacted by this deal. They are ready to rake in huge amount of money post the deal.
Sachin Bansal, co-founder of Flipkart announced his exit from the company is selling shares worth $1 billion. Additionally, the employees, past and present ones are also expected to get a share from the pie of $500 million through their ESOPs. India’s e-commerce industry has been on an upward growth and it is expected to surpass the US industry to become the second largest e-commerce market in the world by 2034. In an industry poised to cross $200 billion by 2026, SoftBank has opened itself to new bets which it might place in other e-commerce companies like Paytm Mall.