With $2.5-bn funding: SoftBank backs Flipkart in e-commerce battle

Flipkart now has $4 billion in the bank after Japanese investor SoftBank’s infusion of close to $2.5 billion. Photographer: Dhiraj Singh/Bloomberg

Flipkart is likely to up the ante in its battle with Amazon India in what is probably the world’s fastest growing e-commerce market. While Amazon’s Jeff Bezos has committed $5 billion to the Indian business, Flipkart now has $4 billion in the bank after Japanese investor SoftBank’s infusion of close to $2.5 billion. In April, Flipkart raised $1.4 billion from Tencent, eBay and Microsoft at a valuation of $11.6 billion. It is not clear whether SoftBank has infused the $2.5 billion into Flipkart alone or some of this will go to private equity player Tiger Global in return for a stake.

What is clear, though, is that the competition between the two for market share will become more keen. Propelled by rising smartphone penetration, the launch of 4G networks and increasing consumer wealth, the Indian market is expected to grow to $188 billion by 2025 from around $16-17 billion currently.

Bank of America Merrill Lynch had recently noted that Amazon’s share was expected to rise from 28 per cent in 2016 to 38 per cent by 2020. On Thursday Flipkart said SoftBank’s investment, a mix of primary and secondary capital, is part of the previously announced financing round with Tencent, eBay and Microsoft. With this, the total amount raised by Flipkart is almost $7 billion, the biggest raise by an Indian Internet start-up.

SoftBank’s investment, via its $100-billion Vision Fund, makes it the largest shareholder in Flipkart, displacing Tiger Global, which is likely to make a partial exit following the deal.