SoftBank kicks off secondary share buy from Flipkart investors

Japanese investment giant SoftBank has reached out to other shareholders of India’s largest e-commerce marketplace Flipkart with a proposal to buy their stock at a valuation of around $9-10 billion.

The move is part of Softbank’s August commitment to pick up additional stake in Flipkart through secondary transactions, giving some investors the option to exit the company either fully or partially.

Out of the total $2.5 billion investment commitment, SoftBank will use around $1.2-1.4 billion in buying out shares of other investors. It is expected that Tiger Global, one of the largest shareholders in Flipkart will sell a substantial portion of its stock to SoftBank, giving it a partial exit. The Mint newspaper reported this first on Thursday.

With both primary and secondary transactions combined, SoftBank’s shareholding in Flipkart could be between 18-20 per cent, giving it significant say on the company’s board. The other big power block on Flipkart’s board is the Tencent-Naspers duo- both of whom remain committed to the company.

Naspers, in its half-yearly financial report on Wednesday, said that it had invested a further $71 million in Flipkart in April. The company reported that its shareholding in the company dropped to 13 per cent after the two subsequent funding rounds that happened later in the reporting period.

Tencent led a $1.4-billion funding round in Flipkart in April this year. Naspers is one of the largest shareholders in China’s Tencent.

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Tiger Global, which has been one of the most prolific venture capital investors in India, is looking at brokering exits from some of its most successful bets here. Business Standard reported last week that SoftBank looking to pick up a 10-12 per cent stake in Ola for around $400-500 million, largely by buying out shares of Tiger Global.

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SoftBank, with the backing of its $100-billion Vision Fund, is committed to taking long-term bets on e-commerce and ride-hailing companies globally, and India is a key focus area.

The Japanese investment firm has said that the valuation of its shareholding in all its Indian investments amounts to $6 billion, making it the largest venture capital investor in the country.