Why Softbank is Investing 700 million in Flipkart after exiting the firm in 2018?

Alan Joseph Alan Joseph
Jun 7, 2021 4 min read
Why Softbank is Investing 700 million in Flipkart after exiting the firm in 2018?

SoftBank Vision Fund is a Japanese based company that had exited from its investments in Flipkart after selling them off to Walmart Inc during the year 2018. But the company has now held discussions in order to invest into the e-commerce giant, Flipkart. Let’s look at why SoftBank is trying to buy Flipkart again.

Softbank Funding – Latest News
Flipkart Plans for IPO in US
Reason for SoftBank’s Investment in Flipkart
Flipkart’s Investment
FAQ

Softbank Funding – Latest News

SoftBank has held discussions with the e-commerce giant, Flipkart to invest an amount of around USD 600 – USD 700 million during the funding round. Certain sources have claimed that the funding which is being raised by Flipkart is much more larger which is expected to be around USD 2 billion.

The funding rounds estimated to see the participation of a group of investors or wealth funds which include Canada’s CPPIB, Abu Dhabi’s ADQ as well as the existing investors of the company which includes GIC and Qatar Investment Authority.

The sources have conveyed that the funding rounds would value the e-commerce giant to closely around USD 25 – USD 30 billion.

Flipkart Plans for IPO in US

Flipkart had plans to go for an Initial Public Offering in the United States and the investment from Soft Bank would lead the company to push aside its plans to go public. This would mean that the e-commerce giant would stay as a private company for longer than it was intended to.

A person close to the developments has conveyed that the deal between SoftBank and Flipkart would be finalized up in the next few weeks of June 2021. As per earlier reports, the e-commerce giant had plans to go public during the year 2022.


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Reason for SoftBank’s Investment in Flipkart

If the deal to invest in Flipkart is finalized then it would be another big move from the Japanese based group, SoftBank in entering into the Indian e-commerce market. The company has already been part of the e-commerce market with huge cash investments.

After the exit from the e-commerce firm Flipkart during the year 2018, the re-entry into the firm is at the right time when the large Indian groups such as TATA and Reliance have been entering into the market sector and is trying to catch the market share.

Even the rival firm of Flipkart which is Amazon has increased its investment in the Indian market by more than USD 7 billion in diversified sectors which include retailing, online payments, food delivery, grocery delivery, etc.

The investment from SoftBank will help the e-commerce giant to build an ecosystem in order to compete with the rivals such as Reliance, TATA and Amazon.

Revenue growth of Flipkart
Revenue growth of Flipkart

List of Softbank investments in India that got huge Success
Softbank has invested in many companies in India and helped them reachmilestones. It has already spent $10 billion as investments on Indian start-upsout of which $8 billion were from its vision fund. Masayoshi Son’s interest inIndia has proved to be profitable for him. Below is the List of top S…

Flipkart’s Investment

Flipkart under the leadership of Kalyan Krishnamurthy has grown significantly over the years. They have increased their investments and the acquisitions in order to bulk up their logistics and supply chain in order to increase the its brand and fashion portfolio.

In the month of April 2021, the company had acquired Cleartrip in order to strengthen its presence in the hospitality sector. Flipkart had also acquired an 8% stake in the Aditya Birla Fashion and Retail Ltd and also a 27 % stake in the Arvind Fashions.

Other recent investments of the company include a logistics startup and a supply chain startup. The company is also focusing to invest heavily into the online grocery platform as it has seen an increased demand due to the pandemic and the lockdown in the major cities.

The company has announced that it has plans to build warehouses for scaling up its grocery business and hired employees for it. The Indian business of Flipkart is operated through multiple entities. The online business is run by Flipkart internet and Flipkart India.

Conclusion

The e-commerce giant has expected to raise funds from the Canada Pension Plan Investment Board and also from the existing investors. 76.9 % of the stake is owned by the Parent company Walmart INC. The other investors include UBS, GIC, Accel, Microsoft, Qatar Investment Authority, Tiger Global Management, Tencent, ESOP pool and the founder Binny Bansal.

FAQ

When did SoftBank Invest in Flipkart?

SoftBank's Vision Fund invested $2.5 billion in Flipkart in August 2017.

When did Walmart invest in Flipkart?

In 2018 Walmart bought a roughly 77% stake in Flipkart for $16 billion.

Is Softbank investing in Flipkart again?

Yes, Softbank is in talks with Flipkart to invest approximately $700 million in it.

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