Snapdeal gets Rs 3,762 cr investment from Softbank

Snapdeal will use the investments in expanding its chain of fulfilment centres and make acquisitions.

By: Press Trust of India | New Delhi | Updated: October 28, 2014 3:10 pm
Kunal Bahl, owner of Snapdeal. Kunal Bahl, owner of Snapdeal.

Snapdeal on Tuesday said Japanese telecom giant Softbank will invest USD 627 million (about Rs 3,762 crore) in the company, becoming the largest shareholder in the online marketplace major.

This is the largest investment made by a single investor in an e-commerce company in India. Other existing investors have also participated in this round of investment but the company declined to disclose the amount.

Snapdeal will use the investments in expanding its chain of fulfillment centres and make acquisitions in the coming few months specifically in the area of mobile technology.

With mobile commerce fast gaining pace in the country, the city-based firm also plans to set up an incubation centre to hone and harness start-up businesses in the mobile technology space within next 6 months.

Through this strategic investment and partnership with Snapdeal, the SoftBank Group aims to further strengthen its presence in India and leverage synergies with its network of Internet companies around the world, Snapdeal said in a statement.

Snapdeal has raised close to USD 1 billion during this calendar year. Founded in 2010, Snapdeal has more than 25 million registered users and more than 50,000 business sellers.

“We believe India is at a turning point in its development and have confidence that India will grow strongly over the next decade. As part of this belief, we intend to deploy significant capital in India over the next few years to support development of the market,” SoftBank Corp Chairman and CEO Masayoshi Son said.

SoftBank has pledged an investment of USD 10 billion (over Rs 60,000 crore) in India’s IT and communications space, one of the biggest investment commitments from a Japanese firm after Prime Minister Narendra Modi’s visit to that country.

“India has the third-largest Internet user base in the world, but a relatively small online market currently. This situation means India has, with better, faster and cheaper Internet access, a big growth potential,” SoftBank Corp Vice Chairman and CEO of SIMI Nikesh Arora said.

Arora will join the board of Snapdeal as part of the strategic investment.

Kunal Bahl, co-founder and CEO of Snapdeal, said that with the support of Softbank, the company is confident of further strengthening “our promise to consumers and create life changing experiences for 1 million small businesses in India.”

Earlier this year, Snapdeal had raised USD 133.77 million in a round led by eBay and USD 105 million from institutional investors including Temasek, Myriad, Tybourne, Blackrock Inc. and Premji Invest.

Tata Sonds Chairman Emeritus Ratan Tata also made a personal investment into the company.

Morrison & Foerster LLP acted as legal advisor to SoftBank, with Kochhar & Co. advising SoftBank on India law matters.

In July this year, Snapdeal rival Flipkart had announced a USD 1 billion funding, the largest to date in the fledgling e-commerce sector from Singapore’s sovereign wealth fund, GIC, as well as existing investors including Tiger Global Management, Naspers, Accel Partners and Morgan Stanley Investment Management.

A day later, world’s largest e-tailer Amazon said it will pump in USD 2 billion to bolster business in India.

A report by consulting firm Technopak pegs the USD 2.3 billion e-tailing market to reach USD 32 billion by 2020.

Another report by consultancy firm PwC and industry body Assocham suggests that e-commerce firms are expected to spend up to USD 1.9 billion by 2017-2020 on infrastructure, logistics and warehousing.

 

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