SoftBank To Buy More Flipkart Shares At A Reduced Valuation

SoftBank, the Masayoshi Son led venture capital firm, offered to buy out more of Flipkart’s shares. The Japanese firm is offering $ 85 to $ 89 per share to investors and former and existing employees of Flipkart.

However, the current price SoftBank is offering for the shares will value the ecommerce company at $ 10 billion, which is lower than its existing $ 11.6 billion valuation. SoftBank’s $ 1.4 billion investment in Flipkart along with the second round of investment from Microsoft, eBay and Tencent Holdings Ltd., in April helped the ecommerce firm secure the $ 11 billion valuation.

SoftBank’s investment gave Flipkart the firepower to compete with Amazon in an all out battle to capture the Indian ecommerce industry. Last week, Tiger Global Management sold 10% of its stake in Flipkart worth $ 600 million to $ 700 million to SoftBank. According to a news daily, Accel, IDG Ventures, Kalaari Capital and some other investors may also sell their shares to the venture capital firm. The sale of these shares will be managed by investment bank Goldman Sachs. Sources close to the development said the shares sale is likely to be completed by the end of December 2017.

In November this year, mutual fund investor Valic Co., marked down the valuation of Flipkart to $ 7.9 billion from $ 11 billion. Sources close to the development said the trimming was an indication that some of the smaller investors of Flipkart were divided over its previous valuation. Nevertheless, the mutual fund investor Morgan Stanley marked up the valuation of the ecommerce behemoth to $ 9.36 billion for the September quarter. The global financing services provider has previously marked down Flipkart’s valuation for five consecutive quarters. Although the current valuation is still considerably lower than the valuation at which Flipkart raised funds, the mark up can be seen as a major victory for the ecommerce firm.

According to a report by Morgan Stanley, India will be the world’s 3rd largest economy with a Gross Domestic Product (GDP) of $ 6 trillion in the next 10 years. The report further added, the Indian ecommerce market will touch the $ 200 billion mark by 2027.