India’s largest e-commerce marketplace Flipkart has confirmed a $1.4 billion fundraise from new investors Tencent, eBay and Microsoft.
This is the largest fundraising round for Flipkart that has raised around $4.6 billion from investors like Tiger Global, Naspers Group, Accel Partners and DST Global among others.
The e-tailer said this capital was raised at a post-transaction valuation of $11.6 billion, a notable drop from $15.2 billion valuation in May 2015 when it had last raised funds of $700 million.
ET had reported in March that the Tiger Global-backed Flipkart was in the final stages of discussions with US-based eBay and China’s Tencent to raise $1.5 billion for a valuation between $10 billion and $12 billion.
“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,” Flipkart founders Sachin Bansal and Binny Bansal said in a statement.
Tencent – an investor in Indian startups like messaging platform Hike and healthcare startup Practo — is coming on board as a strategic investor and will lend significant expertise to Flipkart to further its leadership position in the Indian e-commerce market, the company said.
“This strategic partnership enables Tencent to participate in the exciting opportunities in e-commerce and payments in India. 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, Tencent President.
It’s worth noting that Tencent rival Alibaba along with affiliate Ant Financial owns a significant stake in Paytm’s e-commerce marketplace Paytm Mall and is expected to make its India debut this year. Alibaba had also pumped in $177 million into Paytm Mall last month.
eBay India acquisition & cross-border agreement with eBay
The Flipkart funding also includes a strategic commercial agreement with the global e-commerce player eBay as per which the latter has sold its India business eBay.in to India’s most valuable startup Flipkart in addition to a $500 million cash investment in exchange for an undisclosed equity stake.
eBay.in will continue to operate as an independent entity within Flipkart and the deal is expected to close later this year, the company said. The Bengaluru-based e-tailer has also signed an exclusive cross-border trade agreement, as a result of which Flipkart’s customers will gain access eBay’s global inventory while eBay’s customers will have access to inventory from Flipkart sellers.
eBay said in a statement that Flipkart will acquire eBay’s buyers in India and they will remove the number of active buyers in India from its reporting during the quarter in which the transaction closes. While eBay doesn’t disclose a breakdown of its active sellers in terms of geography, it had reported a total 167 million global active buyers in the fourth quarter of 2016.
“The combination of eBay’s position as a leading global eCommerce company and Flipkart’s market stature will allow us to accelerate and maximize the opportunity for both companies in India,” said Devin Wenig, President and CEO of eBay Inc. “eBay is committed to winning in India in partnership with Flipkart. Our exclusive global trade partnership will allow eBay and Flipkart to reach even more consumers around the world.”
It’s worth noting that eBay also has a minor stake in the beleaguered e-commerce firm Snapdeal that is reportedly in merger talks with Flipkart.
This partnership with eBay is expected to help Flipkart that is currently battling out with Amazon to retain its leadership in the Indian e-commerce sector while also bracing up for the entry of China’s Alibaba.
In October last year, Amazon had launched a global store where Indian customers can purchase select products listed on the company’s US parent site and pay in rupees through local payment options like net banking.