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Softbank had made it official to invest $2 Billion in Flipkart, making it to be one of the most big and magnanimous investments in the country. Flipkart has raised money in the past from Tencent and eBay and was expected to buy out Snapdeal which eventually landed upto Snapdeal denial and looking to strive for its survival rather than surrendering its fate in the hands of Flipkart.
According to the market speculation the company has $ 4Bn of cash in its balance sheet and seems to be benefitted as a result of the retaliation of Softbank against Snapdeal for the merger not happening.
Speaking on the development Binny Bansal and Sachin Bansal, co-founders of Flipkart said, “This is a monumental deal for Flipkart and India. Very few economies globally attract such overwhelming interest from top-tier investors. It is recognition of India’s unparalleled potential to become a leader in technology and e-commerce on a massive scale. SoftBank’s proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor. We’re excited to welcome the Vision Fund as a long-term partner as we continue to build our business with a focus on serving the needs of all Indians, and driving the next phase of technology adoption in India.”
What is $100 billion vision fund
Softbank has decided to allocate $100 billion investment primarily to fund its existing portfolio companies in India. Companies like Flipkart, Grofers, Ola, and Oyo have grown into manifolds and with such dynamics Softbank will have to dedicate funds exclusive to its its backed portfolio companies to have uninterrupted growth. Apart from funding the existing companies, “the Vision Fund will also focus on “technologies of the future” such as the Internet of Things, artificial intelligence, machine learning, robotics, and satellites
The fund is currently managed by SoftBank Group founder and CEO Masayoshi Son and Rajeev Misra who is holding the position of CEO of $100 billion vision fund. The fund was launched in October 2016.
Why did Snapdeal couldn’t be sold to Flipkart?
Softbank has tried to work over the deal to the fullest however the founders and the minority stakeholders were not of the opinion to sell it off to Flipkart for anything less than $900 million. Amidst all this growing conflict of interest between relevant stakeholders, the founder somehow managed to keep Freecharge alive and invested $20 million from their own pockets and finally were able to sell the same to Axis Bank for $60 million.
Considering the fact that even if they are able to sell the stakes to Flipkart, the stakeholders may not be able to get the viable minimum returns they were expecting out of Snapdeal. Hence, they agreed to support the founders in raising Snapdeal again, at this stage of existential crisis.