Flipkart's latest fundraising, led by Chinese internet giant Tencent which is putting in over $500 million, also has eBay and Microsoft as backers.
India’s biggest ecommerce company Flipkart is acquiring eBay’s operations here in a deal structured as part of a $2 billion capital raising. This replenishes its war-chest in its fight with Amazon for market share on its home turf.
Two people familiar with the talks told FactorDaily that eBay’s India unit, which is a distant sixth in terms of market share after Flipkart, Amazon, Shopclues, Paytm and Snapdeal in India’s $15 billion e-commerce market, will get folded into Flipkart as part of the transaction.
The latest fundraising, led by Chinese internet giant Tencent which is putting in over $500 million, also has eBay and Microsoft as backers, the two people said. Bloomberg reported on March 20 that Flipkart has closed its $1 billion funding from Microsoft, Tencent and eBay. FactorDaily’s sources said the round will stay open until it reaches $2 billion in total.
Also see: Kalyan Krishnamurthy to take over as Flipkart CEO, Binny Bansal Group CEO
The round values Flipkart at around $10 billion, which is lower than the $15.1 billion valuation in its last round, but higher than the $8 billion valuation that was expected in the round. “Even a $10 billion valuation means a lot and will go a long way in establishing India’s image among the foreign LPs who have been sceptical about exits,” said an executive familiar with the development.
A second source said that Flipkart’s talks with Walmart to raise funds had not closed and the US retailer could invest in the company in the medium term.
Having raised $4.1 billion in 13 funding rounds since January 2009, Flipkart is locked in an intense battle with Amazon over share in India’s ecommerce market. As Amazon closed in on Flipkart’s lead, the Indian company has seen three CEOs at the helm, with founders — Sachin Bansal and Binny Bansal — stepping away from running core operations. Kalyan Krishnamurthy, a former trusted lieutenant of Flipkart’s biggest investor Tiger Global, is now the CEO.
Also see: Flipkart in charts: Revenues, Losses & other details
eBay, which is a small investor in Snapdeal, has made unsuccessful attempts to acquire the New Delhi-based online retailer over past few years but failed to do so. It will now finally get to become a part of the battlefront against Amazon in India.
eBay launched in India in 2004, much ahead of Flipkart’s birth and Amazon’s entry, but fell behind in the fast-paced market.
Earlier this month, eBay’s country head for India, Latif Nathani, moved back to the US after stint spanning a decade. eBay appointed its India business head Vidmay Naini as the new country manager.
Tencent has backed messaging platform Hike and online medical platform Practo in the past.
At the time of publishing this story, eBay had not responded to an email query sent by FactorDaily on Thursday. This story will be updated if we hear from the company. A Flipkart spokesperson said the “company doesn’t comment on market speculations”.
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