SoftBank bolsters Flipkart's firepower to challenge Amazon in India

FLIPKART FUND

For Flipkart, which has the backing of investors including China's Tencent Holdings and USA eBay Inc., the deal offers a much-needed ammunition to fend off the biting competition from rival Amazon.com.

The new investment is unlikely to deter Amazon CEO Jeff Bezos, who has identified India as his top overseas target and pledged to invest more than $5 billion in the country.

"SoftBank's proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor".

India's largest Internet firm Flipkart Ltd has raised a fresh round of capital from SoftBank Vision Fund-$2.5 billion, three people said-increasing the company's cash reserves to more than $4 billion, which will help in its battle against arch-rival Amazon India. The investment is part of the previously announced financing round, where Flipkart had raised capital from China's internet company Tencent, eBay and global technology giant Microsoft.

"India is a land of vast opportunity", said Chairman and Chief Executive Officer of the SoftBank Group Masayoshi Son.

The deal comes just 10 days after SoftBank's attempts to forge a deal between Flipkart and smaller rival Snapdeal - and thwart Amazon's ambitions in India - fell apart following months of negotiations.

They further stated: "It is recognition of India's unparalleled potential to become a leader in technology and e-commerce on a massive scale".

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The investment also needs to be seen in view of the appeal of the burgeoning Indian e-commerce market.

SoftBank's Vision Fund was launched in October 2016.

"This is a monumental deal for Flipkart and India". The fund is now headed by Softbank Group founder and CEO Masayoshi Son and India born Rajeev Misra, designated as CEO of SVF.

Flipkart, which started by selling books on the Internet in 2007, was struggling to raise money until a year ago, hobbled by a tough private funding environment and shrinking valuations.

An acquisition in these verticals will solve the difficulty of building a supply chain for these specialised categories, "To match up, Flipkart will have to invest at least as much as Amazon, and grocery will be important to increase wallet share", said Satish Meena, senior forecast analyst at Forrester.

Softbank's investment fund, which is now one of Flipkart's biggest shareholders, is also backed by the government of Saudi Arabia, Apple, Qualcomm, and manufacturing heavyweight Foxconn, among others.

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