SoftBank seeks to acquire shares from Flipkart investors, including Tiger Global, Accel, Kalaari Capital and IDG Ventures, and employees for $85-89 apiece
Bengaluru/New Delhi: Japanese telecom and internet conglomerate SoftBank Group Corp. has offered to buy shares from investors and former and existing employees of Flipkart Ltd, valuing the e-commerce marketplace at $9-10 billion, three people familiar with the matter said.
SoftBank has offered to buy the Flipkart shares in a range of $85-89 per share, the people said on condition of anonymity. The price range values Flipkart slightly lower than the pre-money valuation it clinched in two funding rounds of $1.4 billion each, one from SoftBank in August and the other from eBay Inc., Microsoft Corp. and Tencent Holdings Ltd in April.
In August, along with the primary fund infusion into Flipkart, SoftBank had also agreed to buy shares worth $1.2-$1.4 billion from Flipkart shareholders. The share sale and the fund infusion are likely to be completed in December, said the people cited above.
The Flipkart-SoftBank deal has transformed Flipkart’s ability to compete with Amazon India, giving it a backer that can pump in whatever cash is needed to keep the American retailing giant at bay.
The deal is also a boon for India’s start-up investors. Flipkart’s largest investor Tiger Global Management, whose former employee Kalyan Krishnamurthy is the current Flipkart CEO, is expected to sell shares worth $700 million, the people said. Accel, IDG Ventures, Kalaari Capital and some other investors are also likely to participate in the sale, they said.
Flipkart’s largest investor Tiger Global Management is expected to sell shares worth $700 million. Accel, IDG Ventures, Kalaari Capital and some other investors are also likely to participate in the sale
Existing and former Flipkart employees will also sell some of their shares, the people said. SoftBank has put certain caps on the quantity each employee can sell, they said.
Investment bank Goldman Sachs is managing the share sale.
SoftBank declined to comment. Tiger Global and Flipkart didn’t respond to emails seeking comment.
While the share sale is at a lower valuation than Flipkart’s peak valuation, it still represents a big win for Tiger Global managing director Lee Fixel, who has staked his reputation on the Flipkart investment, and Accel, Flipkart’s first institutional investor. The share sale will help Accel record bumper returns on its second fund of $55 million that was launched in 2008.
Kalaari will also secure a much-needed large exit after the proposed sale of Snapdeal, its largest portfolio firm, to Flipkart collapsed in August. IDG, which had sold off a small part of its stake in Flipkart last year, will again score attractive returns from the sale to SoftBank.
While the share sale is at a lower valuation than Flipkart’s peak valuation, it still represents a big win for Tiger Global and Accel, the online retail firm’s first investor
For Fixel, the share sale will cut his exposure to Flipkart, in which he had poured roughly $1 billion across several rounds starting in late 2009. Tiger will still be left with a stake of roughly 20% in the firm, said the people cited earlier.
Fixel is also arranging a sale of some of his stake in another Indian unicorn Ola (ANI Technologies Pvt. Ltd), a fourth person said, requesting anonymity. The Business Standard newspaper had reported news of the share sale at ride-hailing company earlier.
The Ola deal is the second big financial collaboration between Tiger Global and SoftBank, which were once considered arch rivals.
Until the end of last year, the two were the biggest and most influential start-up investors in India. Both had invested roughly $2 billion in internet firms here. But in the course of just four deals (Ola, Paytm, Flipkart and Oyo) and nine months, SoftBank has tripled its start-up investments to more than $6 billion while Tiger Global has avoided investing more in India.