The fresh investment is an extension of the funding round that saw Flipkart raising $1.4 billion from Tencent, eBay and Microsoft in April at a valuation of $11.4 billion, about 23% less than its peak valuation of $15 billion.
Flipkart has now raised more than $6 billion in cash since starting out in 2007, by far the highest by any Indian start-up and among the highest by any start-up globally. He also hinted that going forward there could be chances of Flipkart and Paytm, in which Softbank pumped in $1.4 billion this year, coming together as they have several synergies and use that to fight Amazon in India. The SoftBank investment comes after the Japanese conglomerate's failed bid at facilitating Flipkart's takeover of Snapdeal.
Flipkart has taken a series of aggressive steps in recent months to counter Amazon in India, acquiring eBay's business in the country and pursuing a takeover of its top domestic rival Snapdeal.
SoftBank was at the forefront to stitch up a deal between Flipkart and Snapdeal.com, owned by Jasper Infotech. Both the companies have been locked in an intense battle for leadership in the fast-growing Indian e-commerce market.
After the new investment, Flipkart will have more than Dollars 4 billion cash reserve which may allow the e-commerce giant to expand its consumer base by offering mega discounts through its periodic sales. "SoftBank's proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor", the co-founders said in the statement. The investment makes the Vision Fund one of the largest shareholders in Flipkart. Citi served as financial advisor and AZB & Partners served as legal advisor to the SoftBank Vision Fund.
Softbank's funding will help Flipkart to hire more people in the field of research to develop future technologies to improve customer experience, and compete on a more level playing field with Amazon. Flipkart now has a lot more cash to splash. Current Flipkart CEO Kalyan Krishnamurthy is Tiger Global's representative in the e-commerce major, but his position will come into jeopardy. After this investment, Vision fund will become one of the biggest stakeholders in Flipkart. "In Indian e-commerce, Flipkart is doing that every day", said Masayoshi Son, Founder and Chairman and CEO of SoftBank Group Corp., who previously publicly announced his long-term commitment to investing in India.