August 11, 2017

Flipkart receives much required $2.5 b investment from SoftBank

flipkart softbank

An investment of $2.5 billion from SoftBank Vision Fund has been received by country’s largest e-commerce marketplace, Flipkart. It was a much required armory to continue in pole position for the next 18-24 months as it helps cover competition from the global behemoth Amazon.

It is the biggest private investment in an Indian technology company, making Vision Fund one of Flipkart’s largest shareholders. Flipkart’s cash reserves will go more than $4 billion; however, it did not reveal the total amount that was invested. It is in addition to the $800 million it has as reserves.

A bunch of 10-15 investors also have invested and helped raised the funds upto $300 million. They include both hedge funds and institutional investors. Vision Fund’s primary investment in Flipkart is $1 billion while the other $1.5 billion went towards buying shares from Flipkart’s largest shareholder, Tiger Global Management.

“This is a monumental deal for Flipkart and India...SoftBank’s proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor,” said Binny Bansal and Sachin Bansal, Co-Founders of Flipkart.

Masayoshi Son, Founder and Chairman & CEO of SoftBank Group Corp said, “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.”

Sanchit Vir Gogia, Chief Analyst and CEO of Greyhound Knowledge Group feels that the investment will help in solving cash-flow problems, introducing new product lines like groceries, bringing in fresh talent and making strategic acquisitions in Flipkart, it is insufficient to compete with Amazon. He says, “Amazon has very strong commerce, content, cloud and advertising businesses to back it while Flipkart’s wallet business is weak, it tried and failed in the advertising business and has no play in the content or cloud business.”

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