SoftBank's Vision Fund acquires stake in India's Flipkart

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The investment, following a $1.4bn injection in April from Microsoft, Tencent and eBay, will leave Flipkart with $4bn in cash on its balance sheet. The addition of United States dollars 2.4 billion takes the total amount the company has raised so far to USD 7.4 billion, the maximum amount mobilised by any domestic online platform. This investment will help Flipkart defend its leadership position in the Indian e-commerce market.

SoftBank Vision Fund's infusion of $2.5 billion into Flipkart gives it a ready war-chest to unravel its next level - Flipkart 2.0 - which will help it take on close rival Amazon India which has spent over $2 billion to grow its India business, with promise of more.

Prior to the latest round, USA hedge fund Tiger Global, South Africa's Naspers and Indian venture capital firm Accel Partners were some of Flipkart's major backers.

In a joint statement issued by co-founders Binny Bansal and Sachin Bansal, Flipkart said that the SoftBank investment comprises a mix of primary (investment in the company) and secondary capital (purchase of shares from existing shareholders).

Mythical tech tsars, Jeff Bezos of Amazon and Masayoshi Son of SoftBank, are set to renew their e-commerce hostilities in India, the last of the world's potentially big internet markets.

After the much-hyped merger between Flipkart and Snapdeal failed, speculations were rife that Softbank, a majority stake holder in Snapdeal and a major investor in Paytm may back-off from further investments in this space. However, Amazon has been a mighty challenger to the homegrown market leader Flipkart in India. While the amount invested is not clear, different sources in the industry peg the amount between $2.5-2.6 billion (Rs 16017.5 crore). "As the pioneers in Indian e-commerce, Flipkart is doing that every day", said Son.

"SoftBank's proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor".

This was especially significant as Flipkart is competing against the cash-rich Amazon.

Softbank's investment fund, which is now one of Flipkart's biggest shareholders, is also backed by the government of Saudi Arabia, Apple, Qualcomm, and manufacturing heavyweight Foxconn, among others. Flipkart not only managed to bypass Snapdeal, it also managed to clinch capital and the strategic backing of SoftBank.

Indian ecommerce sector, as a whole, has received a new lease of life.

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