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SoftBank returns to Flipkart, leads $3.6 bn round at $37.6 bn valuation

SoftBank returns to Flipkart, leads $3.6 bn round at $37.6 bn valuation
12 Jul, 2021

Ecommerce marketplace Flipkart has raised a $3.6 billion (about Rs 26,842 crore) funding round from a bunch of global investors including sovereign funds, private equity and crossovers in addition to its majority owner Walmart.  

This round was led by Singaporean sovereign wealth fund GIC, Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2 and Walmart. Sovereign funds DisruptAD, Qatar Investment Authority, Khazanah Nasional Berhad, and global investors Tencent, Willoughby Capital, Antara Capital, Franklin Templeton and Tiger Global have participated, according to a statement. 

The investment values the group at $37.6 billion post-money. 

CPP Investments invested $800 million in this round, according to its statement. 

Flipkart said the fresh capital will help it make ‘deeper investments’ across people, technology, supply chain and infrastructure.   

“This investment by leading global investors reflects the promise of digital commerce in India and their belief in Flipkart’s capabilities to maximise this potential for all stakeholders. As we serve our consumers, we will focus on accelerating growth for millions of small and medium Indian businesses, including kiranas,” Kalyan Krishnamurthy, chief executive officer, Flipkart Group, said. 

“We will continue to invest in new categories and leverage made-in-India technology to transform consumer experiences and develop a world-class supply chain,” he added. 

This is SoftBank’s second coming in Flipkart after its exit from the ecommerce company in May 2018. For SoftBank, this deal is also happening at nearly 2.5 times the valuation at which it exited three years ago. SoftBank’s first Vision Fund invested $2.5 billion in Flipkart in August 2017. Thereafter, the fund elected to fully exit its approximately 20% stake, within a year, after Walmart agreed to acquire a controlling stake in Flipkart in April 2018 for $16 billion. SoftBank sold its stake for $4 billion which brought the fund $1.5 billion in profits. 

“SoftBank’s re-investment in Flipkart is driven by our experience with and conviction in the company’s management team to continue addressing the needs of the Indian consumer in the decades to come,” Lydia Jett, Partner, SoftBank Investment Advisers, said. 

The latest transaction is in the run up to Singapore-incorporated Flipkart’s eventual listing -- slated for 12-18 months down the line. 

Brett Biggs, executive vice president and chief financial officer at Walmart, had recently confirmed the company is actively considering an initial public offering (IPO) route for the Bengaluru based ecommerce giant.  

Speaking at the Baird 2021 Global Consumer, Technology and Services Conference, Biggs said “We have talked about the potential of an IPO. I think it’s something that is still certainly on our minds and I think it could make sense to be a public company and have your associates have that -- the ability to own shares in a company and do things like that like we have in Mexico.”  

Bentonville, Arkansas headquartered retail giant Walmart reported a 5.5% increase in net sales year-on-year in the fourth quarter of financial year 2020-21 for its international business. The international business which grew to $34.9 billion, was led by Flipkart and Walmart’s businesses in Mexico and Canada.  

Flipkart Group had raised $1.2 billion a year ago from Walmart, along with a group of existing shareholders, at $24.9 billion post-money valuation.  

Founded in 2007 by Sachin Bansal and Binny Bansal, the Flipkart Group includes digital payments platform PhonePe, fashion site Myntra and logistics and delivery service eKart besides its flagship ecommerce marketplace Flipkart. 

The company claims it have more than 350 million registered users and over three lakh sellers on its marketplace. Flipkart also works with more than 1.6 million kiranas through its wholesale business and its last-mile delivery program.