The proposed investment is part of a larger $2 billion investment by Softbank Vision Fund 2, which could involve sovereign wealth funds such as Abu Dhabi’s ADQ, Canada’s CPPIB.

Softbank Group
Atom Investment Friday, June 04, 2021 - 16:15

SoftBank Group Corp is in discussions with Flipkart to invest around $600-700 million in the e-commerce firm, according to a report in the Economic Times (ET). This comes three years after the Japanese group exited the company by selling its entire stake to Walmart Inc, the world’s largest online retailer. The proposed investment is part of a larger $2 billion funding round by Softbank Vision Fund 2, which could involve sovereign wealth funds such as Abu Dhabi’s ADQ, Canada’s CPPIB, and the company’s existing investors such as GIC and Qatar Investment Authority. With this funding, Flipkart is likely to be valued at nearly $25-30 billion, sources told ET. 

The transaction is expected to happen before the e-tailer’s proposed listing in the next 12-18 months. Flipkart may go in for another round of funding before its IPO. JPMorgan and Goldman Sachs are reportedly managing the transaction for Flipkart. The Japanese conglomerate was an investor in Flipkart but exited in May 2018. Prior to its exit, SoftBank Vision Fund 1 had invested $2.5 billion in the company in August 2017. In July 2020, Walmart led a $1.2 billion funding round in Flipkart, valuing the online retailer at $24.9 billion. 

Softbank is investing in Flipkart at a time when players like Reliance Industries and Tata are trying to make a dent in the fast-growing consumer internet sector. Reliance’s Jio Platforms has raised several billion dollars from investors including Facebook and private equity firms such as Silver Lake and KKR. Tata Sons, through its subsidiary Tata Digital, recently acquired a majority stake in e-grocery firm BigBasket. Flipkart’s rival Amazon too is investing heavily in the Indian market, having committed over $6.5 billion. 

Flipkart has ramped up investments and acquisitions in the last two years. In April, the e-commerce giant acquired Cleartrip to fortify its presence in the travel space. Last year, Flipkart invested Rs 1,500 crore in offline fashion retailer Aditya Birla Fashion and Retail Ltd (ABFRL). Besides acquiring an 8% stake in ABFRL, it also bought a 27% stake in its subsidiary Arvind Youth Brands. Logistics startup Shadowfax and fresh produce supply chain firm Ninjacart are among Flipkart’s other recent investments. 

The e-commerce firm is also scaling up its presence in the online grocery retail space. Flipkart said it has hired 23,000 people across its supply chain, including delivery executives, in the last three months. Last month, Flipkart announced to boost its grocery supply chain infrastructure to provide its customers safe and seamless access to ordering daily essentials through quick and contactless doorstep delivery. As part of the plan, Flipkart will add over 8 lakh square feet of space through five new fulfillment centres over the next three months.