Japanese investor Softbank has invested over ₹16000 crores in homegrown eCommerce firm Flipkart. According to a report published in Mint, the investment comprises of primary and secondary capital invested by Softbank. 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.
With this investment, Flipkart now has over ₹25,000 crores in cash reserves. This will further help the homegrown company in taking over its rival, Amazon in a long term battle, which will eventually decide the leader in Indian eCommerce industry.
Earlier reports had suggested that Softbank was in talks with Flipkart to invest at least ₹10,000 crores. The said investment was rumoured to be in form of direct investment as well as buying of shares from Tiger Global Management. Earlier there were speculations that Softbank would invest in Flipkart with the only condition of Flipkart acquiring Snapdeal, however, after last week’s development of Snapdeal deciding to go ahead alone, there were doubts over this deal.
In a joint statement issued to media, Flipkart founders, Sachin Bansal and Binny Bansal termed the deal as monumental for Flipkart and India. The statement further added that India is one of those economies who attract such overwhelming response from top tier investors. Softbank has a record of partnering with cutting-edge technology companies and Flipkart is hopeful of a long term fruitful partnership with the investor.
Softbank has made the investment through Vision Fund, its venture fund investing in technology companies. After this investment, Vision fund will become one of the biggest stakeholders in Flipkart.
Earlier, SoftBank was pushing for a merger of Snapdeal — the eCommerce company in which SoftBank holds a majority stake. As a part of the merger deal, SoftBank was going to invest a significant amount in Flipkart. That was said to be the reason for Flipkart being interested in the deal.
However, Snapdeal co-founders rejected Flipkart’s $950 million acquisition offer. After the deal got terminated, SoftBank CEO Masayoshi Son had said that they would engage with Flipkart independently.
In a statement, SoftBank CEO Masayoshi Son said:
India is a land of vast opportunity. 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. As the pioneers in Indian e-commerce, Flipkart is doing that every day.
This investment marks second major funding this year in an Indian startup by SoftBank. Earlier this year, SoftBank pumped in $1.4 billion in Paytm at a valuation of over $7 billion.