Flipkart will announce possibly as early as next week that it has raised over $1 billion (Rs 6,000 crore), the biggest ever fund-raising by an Indian e-commerce company, two people aware of the development said. Half of the amount will come from existing investors Tiger Gobal, Russian billionaire Yuri Milner’s DST and Accel Partners while the rest will come from several new investors.
Among those who are said to be interested in investing in India’s largest online retailer are Singapore’s sovereign wealth fund GIC and USbased investment firm T Rowe Price. With this latest deal, India’s biggest online retailer will have raised over $1.7 billion, valuing it at over $5 billion. “The deal is done,” one person said. “An announcement could be made in a week or two.” Abillion dollars in fresh funding is not just a first for the Indian startup ecosystem, but is also among the biggest fund raises globally this year. In June this year, Silicon Valley-based Uber raised $1.2 billion at a valuation of around $17 billion.
“This is the war chest to consolidate Flipkart’s position in the country — the sector needs long-term, patient investors who can back with big money,” said the second person. Flipkart did not respond to an email query on the developments. Flipkart is rapidly scaling up its operations as it competes with Amazon.in and homegrown competitor Snapdeal. Snapdeal raised further funds of $100 million (Rs 600 crore) in May from Temasek, BlackRock Inc.,Myriad, Premji Invest and Tybourne at an estimated valuation of $1 billion.
Amazon has been pumping money in its India operations and has rapidly expanded to over 25 product categories. It has launched customer service initiatives like next-day and sameday delivery ahead of competition and has embarked on a massive marketing campaign. Flipkart, which crossed $1 billion in sales in March and even acquired online fashion retailer Myntra in May, has also launched customer service initiatives like same-day delivery in multiple cities and at-home trials for certain fashion categories. As orders cross the 5-million-amonth mark, Flipkart will have to continue investing in its backend operations in a cutthroat market. The company, along with other players like Amazon and Snapdeal, is also continuing to discount heavily.
Since 2013, top global investors have competed to pump money into India’s online retail industry, which advisory Technopak estimates will expand from the current $2.3 billion to $32 billion (Rs 13,700 crore to Rs 1.9 lakh crore) in six years.
Over the past four quarters, ecommerce companies cornered 72% of the $1.3 billion (Rs 7,700 crore) that went into Indian technology companies across 266 deals, according to research firm CB Insights.
India’s e-commerce sector is on fire, especially after Amazon entered the country last June. With some of the biggest retailers in the world jostling to get a piece of action in India, e-commerce companies in the country are riding a wave. For instance, while e-Bay is banking on Snapdeal, both Amazon and Walmart are pushing aggressively to conquer what is fast becoming the last frontier for them.
“It’s crazy — but justifiable considering e-commerce in India has just hit the tipping point and companies with most Market share will reap the biggest returns,” said a top executive at one of the e-commerce companies.