The investment from SoftBank's Vision Fund sees Flipkart boost its balance sheet according to the company itself, stating: "After this financing round, Flipkart will have in excess of $4 billion of cash on its balance sheet". The homegrown e-commerce company has to date raised nearly $7 billion in capital, higher than that raised by global behemoths like online house rental aggregator Airbnb ($3.3 billion) and mobile phone maker Xiaomi ($1.4 billion).
Flipkart can now up the ante in the high-stakes battle against Amazon India in what is probably the world's fastest growing e-commerce market. In valuation, Flipkart stands at the ninth position with about $15 billion.
While Snapdeal had stated that it would follow an independent path and was therefore, terminating all strategic talks, sources had said differences in valuation and terms of the deal had led to the fallout after five months of negotiations.
The discussions were terminated after the smaller rival made a decision to pursue an independent path. Sources had said SoftBank was keen to pick up stake in Flipkart and was looking at investing about United States dollars 1.5-2 billion.
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Combating Jeff Bezos' new Indian arm will be a tough ask especially after the American promised extra funding in addition to the $5bn already pledged, but the boosted bank account will certainly be a welcome new weapon for Flipkart. "Very few economies globally attract such overwhelming interest from top-tier investors", Flipkart co-founders Binny Bansal and Sachin Bansal said. He said e-commerce in India consumes a lot of capital.
The funding round further solidifies Flipkart's balance sheet and will help accelerate investment in driving continued market leadership, it added. "We want to support innovative companies that are clear winners in India".
While reporting its financial results for June quarter, SoftBank had included the Fund as a new reportable segment. Citi served as financial advisor and AZB and Partners served as legal advisor to the SoftBank Vision Fund.