SoftBank pumps in $2.5 billion to help Flipkart fight Amazon

Softbank's Vision Fund invests in Flipkart becomes largest shareholder in the firm

The SoftBank investment, which has been reported by Mint and other publications for months, comes after Flipkart's proposed takeover of Snapdeal, SoftBank's portfolio company, collapsed last week. But SoftBank is also a stakeholder in digital payments-focused Paytm, investing $1.4 billion in the company in May and further complicating dynamics within the sector.

The fresh round of investment could make SoftBank the largest investor in Flipkart and reduce the influence of Tiger Global, whose representative Kalyan Krishnamurthy is Flipkart's CEO.

Mythical tech tsars, Jeff Bezos of Amazon and Masayoshi Son of SoftBank, are set to renew their e-commerce hostilities in India, the last of the world's potentially big internet markets.

It also underscores global investors' growing confidence in the Indian e-commerce sector where dominant players Flipkart and Amazon are not burning cash on deep price discounts as much as a few months ago. The Economic Times pegs the deal at $2.5-2.6 billion investment which will make the Vision Fund one of the biggest shareholders in the company.

The funding from SoftBank takes Flipkart's cash reserves to more than $4 billion. "Harish HV, partner, Grant Thorton, believes the infusion is a vote of confidence for the Indian e-commerce industry". Softbank has a record of partnering with cutting-edge technology companies and Flipkart is hopeful of a long term fruitful partnership with the investor.

With this investment, Flipkart has now raised approximately $8 billion via 14 rounds. "In India, we want to support innovative companies that are clear winners because they are best positioned to leverage technology and help people lead better lives". In fact, SoftBank Chairman and Chief Executive Officer Son is an early backer of Alibaba, the e-commerce company that dominates China, a market that Amazon has not been able to crack.

"The Vision Fund is proud to be part of this landmark transaction which is a strong endorsement of India and its thriving economy", said Rajeev Misra, CEO of the Vision Fund. Completion of the investment is subject to customary regulatory approvals and closing conditions. The addition of Dollars 2.4 billion takes the total amount the company has raised so far to USD 7.4 billion, the maximum amount mobilised by any domestic online platform. Amazon's entry into India in 2013 had eroded Flipkart's cash further as it struggled to compete with the USA company offering steep discounts.



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