Flipkart gets $1.4bn funding to face upto Amazon
Global technology groups Tencent, eBay and Microsoft have injected $14bn into Indian e-commerce group Flipkart to face a battle with Amazon.
The fundraising comes ahead of proposed deal for Flipkart to take over its biggest domestic rival Snapdeal, a plan backed by Japan’s Softbank, Snapdeal’s biggest investor.
Forrester Research, which predicted that Indian e-commerce sales would surpass £75bn.
Flipkart accounts for 35 per cent of monthly e-commerce users in India, followed by Amazon 23 per cent and Snapdeal 13 per cent.
Flipkart has raised £1.13bn ($1.4bn) led by China’s internet giant Tencent, with participation from the online auction site eBay and Microsoft, valuing at £9.4bn ( $11.6bn) after the investment.
As part of this transaction, eBay Inc has put $500m in Flipkart and sold its India business to Bengaluru firm.
eBay India valued at $200m, with Tencent and Microsoft have jointly invested $900m in Flipkart.
Once the Snapdeal acquisition is completed, SoftBank the online retailer’s largest shareholder would put $500, in Flipkart.
Tiger Global, a New York-based investment fund is the largest investor having 30 percent stake in Flipkart.
In their latest statement Flipkart founders, Sachin and Binny Bansal, said “ This is a landmark deal for Flipkart and for India as it endorses our tech prowess, our innovative mindset and the potential we have to disrupt traditional markets. This enables us to solve genuine problems in people’s daily lives across all of India.”
The Bansals, co-founded Flipkart in 2007, as an online bookstore and expanded to a leading e-commerce player modelled on their ex-master Jeff Bezos led Amazon.
Tencent, Founded by Ma Hua Teng, Zhang Zhidong, Xu Cheyne and Zeng Liqing in November 1998, however, joins as a strategic investor, bringing experience in linking social networking and e-commerce.
“We look forward to helping Flipkart to deliver compelling experiences to users throughout India, and continue to the development of the Internet ecosystem there,” said Martin Lu president of Tencent.
As part of the deal, Flipkart is also buying rival eBay’s Indian operations. The US-based parent company eBay will receive Flipkart stock worth $200m in lieu of its Indian operations. Flipkart and eBay have agreed in which they will jointly pursue cross-border sales opportunities.