Japan’s SoftBank invests hard $627 mn in Snapdeal

Japan’s SoftBank invests hard $627 mn in Snapdeal
SoftBank, which sells the iPhone in Japan, will become the largest shareholder in Snapdeal, India’s third largest online marketplace with 25 million users and 50,000 businesses.

The Tokyo-based firm, which recently acquired Sprint in the US, is also pumping in $210 million (about Rs 1,260 crore) in taxi services firm Ola.

SoftBank Chairman Masayoshi Son, who was an early investor in Chinese e-commerce site Alibaba, said he had the willingness to invest $10 billion in India in next 10 years as the nation was at a ‘turning point’ in its development and is likely to grow strongly. Its investment in SnapDeal is the largest investment made by a single investor in an e-commerce company in India.

Other existing investors have also participated in this round of investment but the company declined to disclose the amount.Snapdeal will use the investments in expanding its chain of fulfilment centres and make acquisitions in the coming few months, specifically in the area of mobile technology.

The city-based e-commerce firm, which has so far raised about $1 billion this year, is already eyeing 3-4 firms, especially those in mobile technology. Its co-founder Kunal Bahl said: ‘We are looking at acquisition opportunities across sizes, ranging from less than $1 million to $100 million.’

Besides, Snapdeal will open a R&D centre in Bangalore with 500 engineers in the next two weeks to work on platform innovation and areas like mobility, payments and supply chain.

SoftBank said it will become New Delhi-based Snapdeal’s biggest investor but did not specify the exact quantum of stake it has bought in India’s third-biggest online marketplace.

In July this year, Snapdeal rival Flipkart had announced a $1 billion funding. A day later, world’s largest e-tailer Amazon had said it will pump in $2 billion to bolster business in India. With mobile commerce fast gaining pace in the country, the city-based firm also plans to set up an incubation centre to hone and harness start-up businesses in the mobile technology space within next 6 months.

Through this strategic investment and partnership with Snapdeal, the SoftBank Group aims to further strengthen its presence in India and leverage synergies with its network of Internet companies around the world, Snapdeal said in a statement. ‘We believe India is at a turning point in its development and have confidence that India will grow strongly over the next decade. As part of this belief, we intend to deploy significant capital in India over the next few years to support development of the market,’ Son said.

SoftBank has pledged an investment of $10 billion (over Rs 60,000 crore) in India’s IT and communications space, one of the biggest investment commitments from a Japanese firm after Prime Minister Narendra Modi’s visit to that country.

‘India has the third-largest Internet user base in the world, but a relatively small online market currently. This situation means India has, with better, faster and cheaper Internet access, a big growth potential,’ SoftBank Corp Vice Chairman and CEO of SIMI Nikesh Arora said. Arora will join the board of Snapdeal as part of the strategic investment.

Kunal Bahl, co-founder and CEO of Snapdeal, said that with the support of Softbank, the company is confident of further strengthening ‘our promise to consumers and create life changing experiences for 1 million small businesses in India.’ Earlier this year, Snapdeal had raised $133.77 million in a round led by eBay and $105 million from institutional investors including Temasek, Myriad, Tybourne, Blackrock Inc.and Premji Invest.

Tata Sons Chairman Emeritus Ratan Tata also made a personal investment into the company.

Morrison & Foerster LLP acted as legal advisor to SoftBank, with Kochhar & Co. advising SoftBank on India law matters.

In July this year, Snapdeal rival Flipkart had announced a $1 billion funding, the largest to date in the fledgling e-commerce sector from Singapore’s sovereign wealth fund, GIC, as well as existing investors including Tiger Global Management, Naspers, Accel Partners and Morgan Stanley Investment Management.


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