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Flipkart Valued At $10 Billion By Softbank While Offering To Buy Shares Of Indian E-Retailer

Flipkart Valued At $10 Billion By Softbank While Offering To Buy Shares Of Indian E-Retailer
Shares of Tiger Global, Accel, Kalaari Capital and IDG Ventures, and employees in the Indian e-retailer Flipkart is being sought to be bought over by Japanese telecom and internet conglomerate SoftBank for $85-89 a share. The total valuation for the deal has been pegged at $9-10 billion, according to sources quoted by the media.
SoftBank has valued Flipkart lower than what the company had been valued during its two rounds of funding where each round yielded $1.4 billion. The first round was held in August where SoftBank put in money while the eBay Inc., Microsoft Corp. and Tencent Holdings Ltd pumped in money into the company in April – both in 2017.
Shares totaling $1.2 to $1,4 billion from the Flipkart shareholders had been sought to be bought by SoftBank when it funded the company in August. Sources also said that the process of share sale and the fund infusion would probably get closed by December.
Flipkart has been now provided with a strong backer that has the power to pump in all of the necessary cash to fight the U.S. e-retailing giant in India and now Flipkart finds itself in a much better position financially to challenge the supremacy of the US retailer in India.
Indian start-up investors would also benefit from the deal. Sources said that shares worth $700 million that belong to Tiger Global Management, Flipkart’s largest investor, would be sold. The owner of Tiger Global Management is also the CEO of Flipkart currently. Sources also said that participation from Accel, IDG Ventures, Kalaari Capital are also likely in the deal.
Sourcecs said that former and existing employees of Flipkart is also expected to sell some shares. Sources however said that some form of cap has been put by SoftBank on the number of shares that each employee can sell.
The share deal is being managed by investment bank Goldman Sachs.
There were no comments from SoftBank, Tiger Global and Flipkart.
 Tiger Global managing director Lee Fixel has put his complete reputation at stake for Flipkart and the investment made there as well as in Accel, Flipkart’s first institutional investor and the deal is seen as a personal victory for Fixel.
Following the collapse of takeover of Snapdeal by Flipkart in August, this deal now presents an opportunity for Kalaari to ensure a much-needed large exit as Sanpdeal was its largest portfolio firm. The sale of its shares to SoftBank will see IDG making some handsome money even though it had sold off a small portion of its shares in Flipkart last year.

Christopher J. Mitchell

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