Tiger Global, the single largest investor in Flipkart, mayoffload a 10% stake of its 30% holding in the firm, in exchange for $1 billion from SoftBankaccording to the broad contours of the deal. Tiger Global would thus recoup most of the money it had invested in Flipkart and still retain around a 20 per cent stake. On the other hand, SoftBank is likely to invest $1.5 billion (Rs 9,700 crore) or 15 per cent stake in the merged entity.

1. wwww.digitalerra.com
E-commerce Majors Consolidation Gathers
Pace In India
US-based hedge fund Tiger Global is in talks with Japanese investor SoftBank to sell a part of its
stake in Flipkart in exchange for a merger of struggling rival Snapdeal with India’s largest e-
commerce company.
#DigitalErra Thought Corner
Apparently, Snapdeal’s largest investor SoftBankis channelizing a possible merger between the
two e-commerce biggies. The deal if it is clinched would be biggest consolidation exercise in the
$14-14.5 billion Indian e-commerce industry.
A deal between heavyweight investors: Tiger Global Meets SoftBank
Tiger Global, the single largest investor in Flipkart, mayoffload a 10% stake of its 30% holding
in the firm, in exchange for $1 billion from SoftBankaccording to the broad contours of the deal.
Tiger Global would thus recoup most of the money it had invested in Flipkart and still retain
around a 20 per cent stake. On the other hand, SoftBank is likely to invest $1.5 billion (Rs 9,700
crore) or 15 per cent stake in the merged entity.
Here, Tiger Global’s part-exit would mean three-fold return for Tiger Global’s biggest
investment in India, better than some of its poor exits such as Caratlane last year.
SoftBank exploring options for Snapdeal

2. wwww.digitalerra.com
Founded in 2010, Snapdeal was valued at $6.5 billion after a fund-raising previous
year. SoftBank could be exploring three options:Snapdeal-merge with Flipkart, combine with
Alibaba-led Paytm, or a writedown of SoftBank’s investment to zero. In the case of a merger
with Flipkart, SoftBank may route investments in through the Vision Fund, a $100-billion
investment vehicle that counts several Middle East sovereigns and technology giants like Apple
as sponsors.
Flipkart’s re-opening of fundraising channel
Of late, fundraising has had been a little tough for Flipkart. It has seen its valuation being marked
down successively by existing investors, has been exploring various options, including merging
with eBay. This funding round will turn out crucial for the company to take on its arch-rival
Amazon. The development comes on the heels of Flipkart raising a fresh $1 billion from China’s
Tencents and Microsoft.
Amazon has been consistent in mounting pressure on Flipkart. It has increased its shipments in
India by 150% year-over-year. Besides, the consolidation precedes Alibaba’s full-fledged entry
in India where it has recently invested $200 million in Paytm e-commerce
So, Flipkart needs the capital infusion to deal with both Amazon and Alibaba’s onslaught.
Under pressure investors
Over the years, Snapdeal and Flipkart have spent heavily on discounts and marketing as they
focused on building a strong customer base before working toward profitability. This has
widened losses for the companies.
But investors are now increasingly looking for profitable growth and have tightened the purse
strings. Companies have scale-down operations costs, their investors are looking at consolidation
and strategic sales to survive or exit.
Conclusion
One can expect an unparalleled investment from Amazon and Alibaba in the coming times.
Feeling the heat, a merger is very much in sight between e-commerce firms, which can turn out
to be the best option for companies and so their investors alike.