It is the largest deal in the Indian E-commerce industry. Flipkart Ltd will also buy eBay’s India business as part of the $1.4 billion deal. The funding round values Flipkart at $11.6 billion, which is lower than its peak valuation of $15 billion but still higher than the valuation it was assigned by some of its own investors last year.
Top funding rounds in Indian E-Commerce industry published on livemint –
The $1.4-billion (around Rs 9,000-crore) deal is led by China’s Tencent with an investment of $700 million while eBay Inc will contribute $500 million and also receive Flipkart stock worth $200 million in lieu of its Indian operations. Microsoft, which recently signed an agreement with Flipkart to make Azure the etailer’s exclusive public cloud platform, will put in $200 million to round off the deal.
But After the big deal also Flipkart fell short of its target of raising $1.6 billion. Flipkart will be valued at over USD 11.6 billion.
It was valued at USD 15.2 billion in May 2015, at its last funding round. The company has lost 23.6 percent in value since its last big funding round of USD 700 million in July of 2015.
“This is a landmark deal for Flipkart and for India as it endorses our tech prowess, our innovative mindset and the potential we have to disrupt traditional markets.It is a resounding acknowledgment that the home-grown tech ecosystem is indeed thriving and succeeding in solving genuine problems in people’s daily lives across all of India.”
They added “We are delighted that Tencent, eBay and Microsoft — all innovation powerhouses — have chosen to partner with us on their India journey. We have chosen these partners based on their long histories of pioneering industries, and the unique expertise and insights each of them bring to Flipkart.
With the current deal, eBay has entered into a strategic commercial agreement with Flipkart. In exchange for an equity stake in Flipkart, eBay is making a cash investment in Flipkart. It is also selling the Indian business to Flipkart.
Both Flipkart and eBay have also inked an exclusive cross-border trade agreement where Flipkart users will get access to the global inventory of eBay while eBay’s customers will have access to Indian inventory provided by Flipkart sellers. Thus, sellers on Flipkart will now have an opportunity to expand their sales globally.