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Japanese telecom and media group SoftBank Corp has agreed to buy a $627 million stake in online retailer Snapdeal, seeking to tap into India's growing e-commerce market.
SoftBank said it will become New Delhi-based Snapdeal's biggest investor, but officials at the Japanese company declined to say immediately how big the stake in India's third-biggest online marketplace will be.
Snapdeal had raised $340 million in five rounds of funding earlier. The latest funding would take its valuation to more than $2 billion.
“This year, we have raised about $1 billion in total. Softbank has joined us as a long term investors,” Snapdeal co-founder Kunal Bahl told Business Standard in an exclusive interaction. According to him, the deal with Softbank took less than three weeks to materialise.
Other key investors in the company include Indian billionares Aziz Premzi and Ratan Tata, eBay, Kalaari Capital, Nexus Venture Partners, Bessemer Venture Partners, Intel Capital and Saama Capital, Temasek, BlackRock Inc, Myriad and Tybourne and IndoUS Venture Partners.
The move comes at a time when Flipkart recently announced it was raising $1 billion and Amazon said it would invest $2 billion in India.
Bahl pointed out that going public was not on the immediate agenda for Snapdeal and it would keep it focus intact on better technology and brand building.
“We cannot be raising money 24X7. Going public is question of why and how rather than when. The board would take a call as an when required,” he added.
Softbank also has a 37% stake in China’s e-commerce giant Alibaba, which recently created history when it went public.
Incidentally, Softbank's CEO Masayoshi Son visited Prime Minister Narendra Modi and Communications & Information Technology Minister Ravi Shankar Prasad on Monday. Son assured Prasad of his company’s intent to invest heavily in India, saying it was on the priority list of its investment destinations.
"I have a strong willingness to invest more like $10 billion in the next 10 years," Son said in an interview to CNBC TV18 today.
"I have a strong willingness to invest more like $10 billion in the next 10 years," Son said in an interview to CNBC TV18 today.
As part of India focus, SoftBank also said on Tuesday it is leading a $210 million round of investment with existing investors in Indian transportation aggregator ANI Technologies Pvt Ltd. SoftBank didn't specify how much it was investing in ANI, which operates a mobile application for cab booking.
Both deals were negotiated under newly appointed SoftBank Vice chairman and SIMI chief executive Nikesh Arora, reflecting the company's recent aggressive overseas expansion.
"India has the third-largest internet user base in the world, but a relatively small online market currently. This situation means India has, with better, faster and cheaper Internet access, a big growth potential," Arora, a former Google executive, said in a statement.
Arora will be joining both Snapdeal and ANI's boards as part of the investment, SoftBank said.
The cash-rich Japanese company made waves with its plans to grow outside its home base last year when it bought No 3 US mobile carrier Sprint Corp for $21.6 billion. In one of its highest profile investments since buying Sprint, SoftBank said earlier this month it was taking a minority stake in Hollywood movie studio Legendary Entertainment for $250 million.
Snapdeal was founded in 2010 by Kunal Bahl and Rohit Bansal. It works on a controlled marketplace model and has about 50,000 sellers listed on its website.
Snapdeal has also been keen to make further inroads into India amid tough competition from rivals like Flipkart and Amazon. The company is looking to hire 1,500 engineers to strengthen its technology platform and the new innovation centre in Bangalore is expected to open in next couple of weeks.
While Flipkart and Amazon had their special Diwali offers in the weeks gone by, Snapdeal claimed it witnessed 15 times growth in traffic on October 6, the day Flipkart hosted its ‘Big Billion Day’ sale.
The company plans to have 500,000 square feet of transit space in the next 12 months. Acquisitions in payments, big data, and technology are among the other things Snapdeal is upbeat about.
