After a commitment of pumping $10 billion into India over the next few years, Japan's Softbank, a leading investor in the global Internet space, has announced deals worth some $850 million to buy stakes in two Indian new-age firms.
The first was to invest $627 million in SnapDeal, a major player in India's e-commerce space, while the other was to pick a $210-million stake in Ola that offers car rentals in 19 Indian cities through its mobile platform, web site and call centres.
For both SnapDeal and Ola, these will be the largest funding deals reached by them thus far. But the details of how much stake the investments by SoftBank will fetch these two companies was not disclosed.
"We believe India is at a turning point in its development and we have confidence that India will grow strongly over the next decade," Masayoshi Son, chairman of SoftBank, said Tuesday, a day after meeting Prime Minister Narendra Modi here.
"As part of this belief, we intend to deploy significant capital in India over the next few years to support development of the market," he said, adding it was a part of his group's strategy to contribute to people's life through information technology.
Once the funding deal reaches closure, Snapdeal would have raised some $1 billion this year, including $133.77 million in February from eBay and $105 million in May from such investors as Temasek, Myriad, Tybourne, BlackRock and Premji Invest.
The e-commerce major also announced that it will look at three-four acquisitions in the coming few months in mobile technology and intended to set up an incubation centre in six months to harness start-up businesses in this fast-growing space.
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In recent months, another Indian e-commerce major Flipkart had said it will raise $1 billion in funding, even as the US-based global e-retailer Amazon said it would invest $2 billion in India.
Ola said the $210 million will be raised from SoftBank and existing investors like Tiger Global, Matrix Partners and Steadview Capital. It was founded in January 2011 by two alumni of Indian Institute of Technology-Bombay, Bhavish Aggarwal and Ankit Bhati.
Formerly called Ola Cabs, the company took its operations to nine new cities in the past six months, taking its overall presence to 19 Indian cities. Some 33,000 cabs are today available for customers across these cities, the company said.
"This fresh investment led by SoftBank will further propel Ola to be an integral part of India's transportation ecosystem across newer cities by making available an efficient, reliable and convenient option for users and service providers," the company said.
SnapDeal was founded by Kunal Bahl and Rohit Bansal four years ago and has emerged among the fastest-growing online marketplace in India. It now claims more than 25 million registered users and over 50,000 business sellers.
The e-retailer said it also intended to open innovation centres across the country and that after the first one in the nation capital, it had already opened another in India's tech capital Bangalore. Soon Hyderabad and Pune will follow.
SnapDeal said it will also double its technology team size to 1,000 people by the end of the current financial year and expand its supply chain efforts to 30 cities. It now has 40 fulfilment centres in 15 cities.
Kunal Bahl, co-founder and chief executive of Snapdeal, said Nikesh Arora, vice chairman of SoftBank, will join his company's board and that the group will also seek to address the needs of one million small businesses in India.
Arora will be on the board of Ola as well.
During his India visit, the SoftBank chief executive Masayoshi had told Prime Minister Modi and Communications and IT Minister Ravi Shankar Prasad that his group will invest $10 billion in India, as it has been identified as a priority market.
With a market cap of $92 billion, SoftBank is one of the largest players in the telecom and Internet investment space. It already has made investments in many Indian companies like InMobi and Hike.
Globally, it has investments in such companies as America's mobile carrier Sprint and China's e-commerce major Alibaba, its Indonesian counterpart PT Tokopedia and Hollywood studio Legendary Entertainment.