Softbank has offered to buy shares of Tiger Global, other investors as well as existing and former employees in Flipkart. The investment behemoth is offering $85-89 per share that roughly values the online marketplace in the range of $9-10 billion.
According to a Mint report, Tiger Global, Accel, IDG and Kalaari along with a few others investor will sell their shares to Softbank in a secondary round. The Japanese telecom and internet conglomerate had invested $1.4 billion in Flipkart in August.
At a time of fund infusion, Softbank had also agreed to buy shares worth $1.2-$1.4 billion from Flipkart shareholders in a secondary buyout.
The report mentions that Tiger Global is expected to sell share worth $700 million in the buyback. The buyback is happening at a lower valuation in contrast to Flipkart’s peak valuation ($15 billion), however, it’s a much-needed exit for Lee Fixel-led investment firm including early backers like Accel.
The partial exit of Tiger Global and other investors from Flipkart is a good sign for the Indian startup ecosystem where the exit is hard to come by. It also signifies increased prospect of liquidity available in the Internet or technology-driven businesses.
Accel is expected to make a killing on its bet on Flipkart in 2008. Post share buyback by Softbank, Tiger Global will roughly own 20% stake in the Bengaluru-based company, mentions report citing sources.
IDG will also bag attractive returns from the buyback. In 2015, it had sold a 1% stake in Flipkart for around Rs 900 crore at a valuation of $12.5 billion. IDG holds equity in Flipkart through Myntra, which got merged with Flipkart.
Earlier this month, Entrackr reported about Tiger selling 15% stake for around $600 million to Softbank. Last month, Ola had raised $2 billion in a round led by the investment arm of Chinese Internet giant Tencent and Softbank.
Tiger Global’s managing partner Lee Fixel had stepped down from the board of Ola last week.
The exit scenario in Indian startups is being driven by a spike of interest in highly valued companies by two heavyweights – Softbank and Tencent.
So far, Tencent had poured-in close to $1.5 billion in Indian startups, including $700 million in Flipkart while Softbank invested about $6 billion in home-grown companies.