Three years after exit, SoftBank in talks to invest $700m in Flipkart at $28b valuation

Photo: Mint

SoftBank Group Corp. is in talks with Flipkart to invest $700 million in the internet retailer, three years after it sold its entire stake in the company to Walmart Inc., two people aware of the development said.

The proposed investment in Flipkart from SoftBank’s Vision Fund 2 is part of a $1.2-1.5 billion funding round, the people said on condition of anonymity. The transaction is expected to value Flipkart at $28 billion, one of the people said, adding that the deal is expected to close in 3-4 months.

The transaction, the second person said, could value Flipkart at as much as $30 billion, depending on the final set of investors. Prosus Ventures, the investment arm of South African conglomerate Naspers, and other existing investors could raise their stakes, the people said.

The transaction will precede a proposed listing of the Indian e-commerce giant, slated to be in the next 12-18 months, the first person said. The investors signing up for the ongoing round expect Flipkart’s valuation to rise to around $35-40 billion by then, with online sales surging because of the pandemic, the second person said.

Singapore’s sovereign wealth fund GIC and Canadian pension fund CPPIB are also in talks to invest in Flipkart, the second person said. This was first reported by The Economic Times on 11 May.

Flipkart is unlikely to go for another funding round before its IPO, the people cited above said. Investment banks JPMorgan and Goldman Sachs are managing the transaction for Flipkart.

This is SoftBank’s second entry as an investor in Flipkart. It exited the company in May 2018. The proposed deal is also happening at nearly twice the valuation at which it sold its stake three years ago.

SoftBank’s Vision Fund 1 invested $2.5 billion in Flipkart in August 2017 but sold its approximately 20% stake within a year after Walmart agreed to buy a controlling stake in the startup for $16 billion. SoftBank sold its stake for $4 billion, netting $1.5 billion in profit. But the exit required the Japanese investor to pay a steep 43% short-term capital gains tax, for which the fund had set aside $648 million, Business Standard reported on 7 August 2018.

SoftBank Vision Fund 2 has made aggressive bets in India this year. It is now set to invest in food delivery unicorn Swiggy, which would be its first bet in the foodtech space.

SoftBank’s investments in banking tech firm Zeta last month valued the firm at more than $1 billion. Its proposed investment in OfBusiness is also set to catapult the business-to-business marketplace to the unicorn club.

SoftBank and JP Morgan declined to comment. Flipkart, Goldman Sachs Ventures, Prosus, GIC, and CPPIB did not immediately respond to a request for comment on Thursday evening.

The article was first published on livemint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.