Last week we reported that leading ecommerce firm Snapdeal had terminated talks for a takeover by its larger rival Flipkart. Snapdeal walked away from a potential $850 million deal favouring instead to go in a new direction with Snapdeal 2.0. Now it has been revealed that the most anticipated deal in Indian ecommerce has been done, with Flipkart raising an investment from Softbank, a major investor in their rival Snapdeal.
The funding round is a mixture of primary and secondary capital with the exact details currently undisclosed. However, it is thought that Flipkart will now have more than $4 billion of cash on its balance sheet
Binny Bansal and Sachin Bansal, co-founders of Flipkart said that they were delighted in a pre-prepared statement. “This is a monumental deal for Flipkart and India. Very few economies globally attract such overwhelming interest from top-tier investors. It is recognition of India’s unparalleled potential to become a leader in technology and e-commerce on a massive scale. SoftBank’s proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor. We’re excited to welcome the Vision Fund as a long-term partner as we continue to build our business with a focus on serving the needs of all Indians, and driving the next phase of technology adoption in India.”
It has been claimed by Flipkart that this is the biggest ever investment into an Indian technology company. Talking about the funding, Masayoshi Son, Founder and Chairman & CEO of SoftBank Group Corp talked about his company’s support for innovation in India.
“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.”
However, the investment does raise some interesting questions the main one being that with Softbank now being one of the main investors in both Flipkart and its rival Snapdeal, does this result in a conflict of interest on the part of the investor? Or does Snapdeal no longer matter in this costly ecommerce battle for Indian retail?
Secondly, how will the global ecommerce giant Amazon respond not just to the growing threat from Alibaba in India, but by Softbank too? One thing is for sure, the Indian ecommerce market is one of the fast growing and most dynamic in the world at the moment and is one of the key battlegrounds for the major ecommerce platforms in the world.