Flipkart Raises Whopping $1.4 Billion Funding With $11.6B Valuation; Acquires Ebay!

 

The new fiscal year starting from April is proving to be a crucial year for Indian e-commerce industry. The first shot of fireworks has just been ignited, as Flipkart, India’s largest e-commerce portal, has announced a major news.

The biggest news is that Flipkart has raised $1.4 billion from three major investors: Tencent, Microsoft and Ebay; and this is Flipkart’s largest ever fundraising in their last 10 years of existence.

And the most significant news is that Flipkart has acquired Ebay India, thereby cementing their position strongly, and directly challenging Amazon’s ambitions in India.

In their blog post, Flipkart said, “The biggest investment in Flipkart’s 10-year history comes at an opportune moment for e-commerce in India. Tencent, eBay and Microsoft have made investments aggregating to $1.4 billion in Flipkart, India’s leading online marketplace.”

This investment has been made at a valuation of $11.6 billion, which has been reduced from $15.2 billion, during their last investment in 2015.

While this may sound confusing, but Ebay has invested a significant amount of VC funds into Flipkart, and at the same time sold off Ebay India. And in the bargain, they have acquired a small stake in Flipkart as well.

The blog post stated: “In exchange for an equity stake in Flipkart, eBay is making a cash investment in and selling it’s eBay.in business to Flipkart. eBay.in will continue to operate as an independent entity as a part of Flipkart.”

Besides, eBay and Flipkart has also signed a cross-border treaty, according to which Flipkart customers can now get easy access to international listings made on Ebay, while eBay users from the US can now seamlessly purchase products from India.

After acquiring Myntra, Jabong, PhonePe, Ebay India is seen as a major acquisition for Flipkart.

Why Is This A Significant Twist In Indian Ecommerce Story?

Mainly, there are two reasons:

a) Ebay is a fierce competitor of Amazon in India. By collaborating with Ebay, and actually acquiring Ebay India, Flipkart has made a smart move. They are grouping all Amazon’s competitors to form a solid defence in India. Last year, talks were on about a possible Walmart investment into Flipkart, and Walmart is another big competitor of Amazon in the US.

b) Tencent is considered as Alibaba’s biggest competitor in China. Last week, Tencent reported $21.2 billion revenue, which exceeded all market analysis and expectations. Last year, Tencent overtook Alibaba to become China’s most valuable tech company.

And with Alibaba’s ambitious plan to capture Indian market, riding on Paytm’s popularity and exposure, Flipkart has made a big move to shake hands with Tencent.

While Ebay, Microsoft and Walmart can help Flipkart to stop Amazon’s growth, Tencent can prove to be a good ally to defeat Alibaba and Paytm’s incredible expansion in India.