The recently released Inc42 DataLabs Funding Report 2017 quoted the last year as the ‘era of SoftBank India invasion’. With empires like Flipkart, Ola, OYO, Swiggy, Paytm under its control, SoftBank is now eyeing to invade Alibaba’s ecommerce fort, Paytm Mall. Reportedly, Paytm Mall is in talks with SoftBank to raise $600 Mn at a valuation of $2 Bn.
Primavera Capital Group, a China-based investment firm focusing on private equity and special situations opportunities, as well as Singapore state investment arm Temasek Holdings are also expected to participate in this funding round.
As per the media report, the earlier fund infusion in Paytm Mall came internally from SAIF Partners, Alibaba, and Ant Financial. “Because of this, the valuation of the company was never clear. The latest funding from SoftBank and others will clearly put Paytm Mall in the unicorn bracket,” added a Business standard source.
An email sent to Paytm Mall did not elicit any response till the time of publication.
SoftBank: Major Bets In India
The Japanese conglomerate started its India invasion in 2011, betting $200 Mn on the tech company InMobi. Fast forward to 2014, SoftBank shifted its focus to India’s rising consumer internet segment for the next few years, placing its eyes on sectors such as ecommerce, budget hotel providers as well as online grocery, thereby raking in significant stakes in startups such as Snapdeal, OYO and Ola respectively.
However, as 2016-17 called for market correction, prompting even the established players like Snapdeal, Flipkart, Grofers, Zomato to look for a substantial base to survive, the majority of SoftBank’s investments in India got tangled in the web of losses.
It was the end of 2016 when Masayoshi Son led SoftBank started taking command and pitched in for consolidating losses in its Indian investments. While the Snapdeal-Flipkart merger fiasco hit the Japanese conglomerate hard, it did not stop Son from making further bets in the Indian ecosystem through its $100 Bn Vision Fund.
Between April-December 2017 alone, SoftBank has already invested over $5 Bn (almost equivalent to Amazon’s five-year investment target in India) to acquire significant stakes in a few of the major companies in the Indian consumer internet segment. This includes
- May 2017: $1.4 Bn in One97 Communication Ltd. (Paytm)
- August 2017: $2.5 Bn in Flipkart
- September 2017: $250 Mn In OYO
- October 2017: $1.1 Bn in Ola
Further, as reported earlier by Inc42, SoftBank is also said to be in talks with new/existing portfolio companies for the follow-on funding as well as stake buyout rounds. This includes Grofers ($65 Mn funding at a 40% lower valuation), Swiggy ($250 Mn funding), PolicyBazaar (major stake acquisition at a valuation of $800 Mn), Flipkart (buyout of shares at $10 Bn valuation) amongst other speculations.
The results of this aggressive spending are evident too. Just last month, SoftBank posted gains of $74 Mn (JPY 8,069 Mn) on account of the gain on investments made in companies in Southeast Asia and India in the nine-month period ending in December 2017. The gain is in contrast to the loss of $360 Mn (JPY 39,281 Mn) that it incurred during the corresponding period ending December 2016.
The bet on Paytm Mall might help SoftBank reap more profits, as the company is gearing to take on Amazon with its e-grocery division. As per recent reports, Paytm also plans to invest up to $2.5 Bn to grow its nascent online shopping portal business within three to five years as it eyes the top spot currently being fought over by Flipkart and Amazon.
With SoftBank trying to acquire stakes in the Indian unicorns at an aggressive pace, it’s time for the Indian startup ecosystem to fasten its seat belt and get ready for some serious action. As far as the funding in Paytm Mall is concerned, if the deal goes through, the ambitions of Vijay Shekhar Sharma will certainly get wings to fly high in the sky.
[The development was reported by Business Standard.]