Japan’s Softbank Group Corporation is in expansionist mode with regard to India, investing in companies such as Ola, Flipkart, Paytm and Oyo Rooms. In the last few months, its investments in the global e-commerce market have been successful in keeping Amazon.com Inc, the world’s largest online retailer, at bay.
Group Chairman Masayoshi Son has described acquisitions in Flipkart and Paytm as significant business achievements in the context of India as they are market leaders in their sectors.
Recent data appearing in the public domain indicates that Flipkart has a 60 percent share in India’s e-commerce market, while Paytm has a 58 percent share of India’s digital payments business.
In its latest earnings report, released last month, SoftBank reported a gain of 10.2 billion Yen ($89.3 million) on its India investments. In the one year since Son last visited India, SoftBank has pumped more than $4 billion into the Indian market, taking its investments in Indian start-ups to more than $6 billion .
Softbank’s expansionist moves owed much to Nikesh Arora, its former president, who brought in a considerable foreign expertise and talent while helming the enterprise from October 2014 till June 21, 2016.
Among the talented persons he brought into SoftBank before his exit were Alok Sama (CFO, ARM) and Rajeev Mishra (Vision Fund), Marcelo Claure (Sprint).
Arora and his team were collectively taking Softbank to greater heights, but their proximity to Chairman Son raised eyebrows and reportedly made Japanese board members, including Chief Operating Officer Ken Miyauchi, uncomfortable and insecure. The Japanese were reportedly unhappy with foreign influence in core decision-making, seeing them as loud and disruptive, as also alien in terms of core values and sensitivities. The foreign talent is also paid much more than Japanese .
Nikesh, though, was responsible for making Softbank global in the real sense through key investments in the e-commerce sector. He decided to resign in June 2016. This definitely hit SoftBank for a while since finding a professional like Nikesh wasn’t easy
The focus appears to be now on Alok Sama, Marcelo Claure and Rajeev Mishra. They were close to Nikesh and are under tremendous pressure despite their experience and credentials.
Alok Sama is involved in sourcing other deals and supporting transaction agreements related to the group and has been sidelined. Claure is said to be in the dock over alleged failures at Sprint . Rajeev doesn’t have technology investing experience credentials and hasn’t worked with this size of fund .
The fund has sprinkled money in a wide-ranging group of companies spread across biotech, bike-sharing and robotics in the hope of it impacting everyone’s lives
There is speculation that if this politics continues, the performance of SoftBank may take a hit and it stands to lose much of its dream
The Japanese fear is not uncommon. In India, too, some of the companies headed by foreigners are said to be unstable. External expertise, therefore, may not be seen as entirely beneficial or rewarding.