Flipkart raises $1.4 bn, acquires eBay India

Sanjeev Sharma

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Tribune News Service

New Delhi, April 10

India’s largest e-commerce firm, Flipkart, today said it has raised $1.4 billion from global technology majors Tencent Holdings, Microsoft Corp and eBay Inc, the largest investment in the company’s 10-year history as well as in India’s internet sector that includes acquisition of eBay India. There is a speculation that the online marketplace is in talks to take over smaller rival Snapdeal.

As part of the transaction, eBay India becomes part of the Flipkart Group. The latest funding round from the three technology giants values Flipkart at a post-transaction valuation of $11.6 billion. The existing group of marquee investors in the company includes Tiger Global Management, Naspers Group, Accel Partners and DST Global.

Sandy Shen, Research Director, Gartner said, “This is good news for Flipkart as it solidifies it as a market leader at least in the short term, keeping competition especially Amazon at bay”.

“We are delighted that Tencent, eBay and Microsoft — all innovation powerhouses — have chosen to partner with us on their India journey. We have chosen these partners based on their long histories of pioneering industries, and the unique expertise and insights each of them bring to Flipkart. This deal reaffirms our resolve to hasten the transformation of commerce in India through technology,” Sachin Bansal and Binny Bansal, founders of Flipkart, said.

Tencent, a leading provider of internet value-added services in China, joins as a strategic investor, bringing experience in linking social networking and e-commerce, Flipkart said.

The investment by eBay is accompanied by a strategic commercial agreement with Flipkart. In exchange for an equity stake in Flipkart, eBay is making investment of $500 million and selling its eBay.in business to Flipkart. Flipkart will continue to run eBay.in as an independent entity.

Flipkart and eBay have also signed an exclusive cross-border trade agreement, as a result of which customers of Flipkart will gain access to the wide array of global inventory on eBay, while eBay’s customers will have access to unique Indian inventory provided by Flipkart sellers. Thus, sellers on Flipkart will now have an opportunity to expand their sales globally. Flipkart also owns Myntra, Jabong and PhonePe, a UPI-based app that provides cashless payment.

“Although India’s e-commerce market is still at an early stage, the market is seeing signs of consolidation. Flipkart has been and will continue to make acquisitions to increase scale, and the next challenge is to strategise the path to a sustainable business model within a set time frame”, Shen said.

“We look forward to helping Flipkart to deliver compelling experiences to users throughout India, and to contribute to the development of the internet ecosystem there,” said Martin Lau, president, Tencent.

(with PTI inputs)