SoftBank offers to buy Flipkart shares from market at reduced valuation

30 Nov 2017

Japan's Softbank Group Corp has offered to buy an undisclosed number of shares in Indian ecommerce leader Flipkart at a reduced valuation in the range of $9 billion to $10 billion, reports today said.

Softbank offered to buy Flipkart shares from investors and former and existing employees for $85 to $89 per share, the paper reported, citing sources.

Flipkart could not be immediately reached for comment, while Softbank declined to comment.

Bengaluru-based Flipkart reported an $11.6 billion valuation in April, after a funding round from China's Tencent Holdings Ltd and others.

It was reported in August that SoftBank's Vision Fund would invest nearly $2.5 billion in Flipkart through primary and secondary share purchases. The company had then said this would be the biggest ever private investment in an Indian technology company.

In a statement, it said, "The investment is part of the previously announced financing round, where Flipkart had raised capital from three of the world's premier technology companies - Tencent, eBay and Microsoft.

"After this financing round, Flipkart will have in excess of $4 billion of cash on balance sheet."

Flipkart was valued at $11.5 billion during its last fund-raise, which saw investments from Microsoft, Tencent, and eBay (whose India arm was bought over by Flipkart) besides SoftBank. That itself was lower than Flipkart's peak valuation of $15 billion in April 2015.

Despite its valuation registering a drop in the last two years, it continues to be India's most valuable startup, and also the world's third-most funded startup. It trails only China's Didi Chuxing and America's Uber – both ride-hailing companies that count SoftBank as an investor – in terms of capital raised.

Flipkart's share sale to SoftBank is likely to completed in December, and it would lower Tiger Global's stake in the ecommerce firm to about 20 per cent. Tiger Global alone is expected to sell Flipkart shares worth $700 million to SoftBank. The other investors participating in the share sale include Accel, according to BGR News.

In the initial years of the Indian startup boom, Tiger Global had been a key backer of marquee firms.

In the second decade of the startup economy, SoftBank has taken over that mantle. In less than a year, SoftBank Vision Fund has invested more than $6 billion in leading domestic startups – brokering partnerships, lowering the stake of former investors and giving them exits, as well as lending credibility to several operations with much-respected Japanese capital.

Flipkart has been a big beneficiary and is now armed with $4 billion in cash to take on the deep-pocketed Amazon India.