Indian regulator reviews SoftBank’s Flipkart investment
SoftBank Group’s investment in Indian e-commerce giant Flipkart, which is expected to facilitate an exit for several existing investors, is being reviewed by the country's competition regulator.
SoftBank has agreed to buy up to 20% of Flipkart through its SoftBank Vision Fund - the group’s global technology fund that reached a first close of $93 billion earlier this year - according to a filing by the Competition Commission of India (CCI).
The filing did not contain financial details of the transaction, but SoftBank has previously announced plans to invest $2.5 billion through the acquisition of primary and secondary shares. Indian media have reported that the secondary portion involves shares held by Tiger Global Management and Accel Partners.
The deal would be the largest-ever private investment in an Indian technology company and make SoftBank the largest shareholder in Flipkart. The group previously allied itself with Flipkart’s principal domestic rival Snapdeal, which has struggled to gain market share amid strong competition from Flipkart and Amazon.com. SoftBank has marked down its India portfolio, which includes stakes in Snapdeal and ride-hailing app Ola, several times over the past year.
Snapdeal’s relations with investors reached a breaking point earlier this year when a SoftBank-brokered merger with Flipkart was blocked by Snapdeal founders Kunal Bahl and Rohit Bansal, who cited overly restrictive requirements imposed by Flipkart.
Flipkart has weathered its own setbacks in recent years, with several senior executives departing and the company changing CEOs twice since January 2016. In addition, the company suffered a series of markdowns by US-based mutual funds including Fidelity, Morgan Stanley and T. Rowe Price.
However, since the installation of Kalyan Krishnamurthy, formerly of Tiger Global, as CEO, investor confidence has risen. A $1.4 billion funding round earlier this year by Microsoft, eBay and China’s Tencent Holdings – to which SoftBank’s investment is an extension – valued the company at $11.6 billion, down from $15 billion as of the previous round but still considered a healthy valuation.
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