Flipkart prepares to pounce on Snapdeal after $1.4 billion funding round
FLIPKART has sealed a US$1.4 billion funding round in a flurry of deals that saw it acquire eBay’s Indian operations and set the stage to snap up India’s No 3 e-commerce player Snapdeal.
The round was led by Chinese tech giant Tencent who put forward US$700 million, while eBay will put forward US$500 million and receive US$200 million worth of stock in lieu of its Indian operations. Microsoft accounts for the final US$200 million.
Funding came on the basis of a US$11.6 billion value, which is down from the US$15.2 billion valuation during its last fundraising round in 2015. But the deal has won Flipkart some powerful allies and a slush fund to take on arch rival Amazon, which said last year it would invest more than US$5 billion in India.
— Chandra R. Srikanth (@chandrarsrikant) April 10, 2017
“We are delighted Tencent, eBay and Microsoft – all innovation powerhouses – have chosen to partner with us on their India journey,” Flipkart’s founders Sachin Bansal and Binny Bansal said in a statement seen by The Business Standard.
“This deal reaffirms our resolve to hasten the transformation of commerce in India through technology,” it said.
Flipkart’s purchase of eBay is just the latest in a series of acquisitions of e-commerce rivals after previously buying out Myntra and Jabong. The company is widely expected to dedicate some of its newfound wealth to buying out India’s other major e-commerce player Snapdeal, according to The Economic Times.
But writing in Business Today, Rajeev Dubey says the deal for eBay and likely deal for Snapdeal could spell trouble for Flipkart. Normally, companies buy others to acquire their brand, their customer base or their business, he writes.
“Neither Snapdeal nor eBay has anything to offer that Flipkart doesn’t already have,” he said. “It appears to be a desperate attempt at keeping its nose ahead in ‘market share’, come what may.”