SoftBank Reinvestment In Flipkart has raised the eyebrow for most of the existing players. SoftBank Vision Fund has once again re-established its confidence in Flipkart. They are planning to reinvest around $600-700 million to boost its business portfolio. Let me tell you that some time back SoftBank had exited from Flipkart and sold its entire share to Walmart. Now SoftBank re-entry to Flipkart has attract attention of all major e-commerce players in the market. A person close to this deal has confirmed the news. He said, “Flipkart is in talks with SoftBank and the final modalities for the deal will be worked out in the next few weeks.”
According to internal sources, SoftBank Reinvestment In Flipkart will be around $2 billion. This may include groups of sovereign wealth funds like ADQ of Abu Dhabi, CPPIB of Canada. Along with these new investors, the existing investors like GIC and Qatar will also increase their stake by infusing new funds. Flipkart’s new investment plan has confused the industry experts and they are waiting for the development before making any observation.
Why SoftBank reinvesting in Flipkart after exiting from the company
The recent development and pandemic has pushed SoftBank Vision Fund to relook Flipkart. There was a massive growth in grocery business reported by Flipkart in recent past. The fSoftBank Reinvestment In Flipkart will creative massive liquidity in the Indian eCommerce market. This will help existing players and Flipkart to explore new areas of business. Flipkart’s traditional rival Amazon consistently invested in the India market from a very long time. Amazon has invested about $7 billion in retailing, online payments, video streaming, food delivery and many other sectors.
Also Read: Poor Economic Growth will lead to high inflation and job loss in India
SoftBank Reinvestment In Flipkart will create new competition in the eCommerce market. This will also help Flipkart to exploring new areas for e-commerce business in overseas apart from India. The existing e-commerce players will also forced to increase their investment in the sector to be relevant. The Flipkart expansion in new areas will create healthy competition and increase business opportunity. SoftBank Reinvestment In Flipkart will help Indian economy to go back on track and create new jobs and open market for small sellers.
Does SoftBank investment in Flipkart will help them in US listing?
The SSoftBank Reinvestment In Flipkart will speedup the process for companies listing in US market. This will also help Flipkart to maintain the private company status even after the listing in US exchange. The investors will get more money by liquidating their stake while make private entity to a public company. SoftBank Reinvestment In Flipkart has larger meaning and will try to convert Flipkart as global company.
Also Read: How 100 Million Job Loss in second wave shaken the Indians job hope
Many believe that US listing of Flipkart will attract global investors and allow local US citizens to invest. The local US citizens will also get an opportunity to make money from an emerging company expending its footprint in new markets across the globe. Flipkart will also take an advantage of American investors who can introduce them in new market across the world. This will be a good decision for the future of the company.
Does SoftBank want Flipkart to explore business beyond gadgets, electronics and fashion?
SoftBank Reinvestment In Flipkart will make it strong and powerful option to compete with Amazon, Reliance and the Tata Group. Aside this, most of the Indian e-commerce platform still working like online retailers in India. And this is a very little small part of this entire digital space. Thats why Flipkart Chief Executive Kalyan Krishnamurthy has made investments in last two years. He has acquired companies to enhance supply chain, logistics and fashion brand portfolio of the company.
Also Read: Why Half of Indian Startups Shut Down before end of FY 2021-22
Flipkart acquired Cleartrip to strengthen its presence in the online travel and hotel booking in April. Last year, Flipkart invested Rs 1,500 crore to pick about 8% stake in Aditya Birla fashion and retail company. They also pick the 27% stake in Arvind Youth Brands, a subsidiary of Arvind Fashion to enhance its fashion portfolio. Such investment has created more interest for SoftBank Reinvestment In Flipkart and they believe it will give them good returns in long run.
Why SoftBank tried to consolidate Indian eCommerce Companies in 2017
SoftBank tried to consolidate Indian largest e-commerce like Snapdeal and and Flipkart in 2017. They sensed the entry of large players and thought to build a single competitive e-commerce company. But the deal failed due to protests from Snapdeal and it has pushed SoftBank to pursue only Flipkart. But when Walmart decided to enter India’s retail eCommerce business in 2018. The SoftBank sold its stake to Walmart in $ 4 billion and exit from Flipkart. Walmart acquired 77% stake in Flipkart and become a largest share holder with this deal.
Also Read: Setback for Reliance Industries and Future Group Deal by Court
Let me tell you that SoftBank knows that big global players like Amazon and Walmart entry in retail market will change the dynamics. They are known for huge investment and use their global learning to build the market in placed where they enter. Thats why SoftBank exited from Flipkart and allowed these global players to reshape the indian e-commerce market. SoftBank also thought that more merger and acquisition in Indian e-commerce space on that time. But now SoftBank Reinvestment In Flipkart has different meaning and new interest.
What is the real battle of India eCommerce market?
The real battle of Indian eCommerce market is the retail grocery business. There has been an unprecedented growth in this business in the last one year. The pandemic and lockdown pushed most of indian to move on online purchase of their essential and grocery items. Now large number of customers come and do their daily shopping from these eCommerce portal. The online grocery space is dominated by BigBasket and Grofers in India. But they too don’t have pan India presence and still hold a very little market share in tis space. The SoftBank Reinvestment In Flipkart is because of their entry in Indian grocery business.
Also Read: Is this Startup India and Make in India is just an illusion for youth
Let me tell you that Indian grocery market is the largest grocery market in the world. Most of Indian buy their ration from the local ration shops in their areas. Many such retailers only push products which has high margin. Many competitive brands does not get the space on those retails stors. This all has huge potential from seller to consumers in Indian retail grocery market. Thats why almost all the big Indian groups trying their luck in this field. The Tata Group, Reliance Industries, Birla Group, Bharti and many other groups have already made their presence in Indian grocery retail business. Now Flipkart and Amazon has to play a bigger role considering their reach and logistical presence.
You may also like to read: Mamta Banerjee National Ambition started shaping
