Softbank may have missed out on getting a piece of Flipkart when the much anticipated Flipkart Snapdeal merger fell through last month. The said investment was rumoured to be in form of direct investment as well as buying of shares from Tiger Global Management.
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. The battle for India's e-commerce market is set to get hot - Flipkart is the top online retailer in India, but Amazon India has commitments of around $5bn from its USA parent to expand its market share there.
Flipkart's balance sheet has now been boosted to more than $4bn of cash on its balance sheet. "As the pioneers in Indian e-commerce, Flipkart is doing that every day", said Son. "It will not be easy for Flipkart to go against it", he said adding that the world will be ruled by artificial intelligence, robotics and machine learning, and that Amazon is way ahead of the market is using these new technologies to remain the world leader over the next 5-7 years. "We want to support innovative companies that are clear winners in India". "SoftBank's proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor", Flipkart co-founders Binny Bansal and Sachin Bansal said in a joint statement.
"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. Citi served as financial advisor and AZB and Partners served as legal advisor to the SoftBank Vision Fund. The talks collapsed at the end of July, but multiple reports suggested SoftBank would participate in Flipkart's next funding round.
eMarketer estimates that retail ecommerce sales in the country will total $22.35 billion this year, but account for just 2.2% of total retail sales.
The recent capital infusion is the biggest funding in Indian startup space to-date.
After the latest round, Flipkart has raised more than $6 billion in cash since starting out in 2007.
SoftBank in May had said the fund will target "meaningful, long-term" investments in companies that seek to enable the next age of innovation.
Amazon, on the other hand, has been bullish on its plans for India.