After tasting outcome of back to back bad investments in then promising outliers – Snapdeal and Housing, SoftBank has just made a decent exit. The Masayoshi Son-led investment firm had scooped up 60 per cent upside on its nine months old bet on Flipkart.
Though, the exit can’t be considered a stellar or remarkable one. It certainly has resurrected the faith of world’s largest technology-focused fund. In fact, the deal has paved the way for several mega bets by SoftBank in the next couple of years.
While there has been a catch for SoftBank future investment deals till it sells out complete holding in the Bengaluru-based company, it’s contemplating to up its ante in one of the world’s fledgling e-commerce markets by pumping massive $3 billion into Paytm Mall.
Besides head-on fight between Amazon and Walmart, SoftBank and Alibaba would help Paytm Mall as well as Snapdeal (in case it makes a turnaround) to strengthen the so-called ‘third front’ in Indian e-commerce space.
SoftBank is done with Flipkart and can’t back Amazon. The obvious choice is to back Paytm Mall, Snapdeal or ShopClues in horizontal e-commerce segment. Undoubtedly, Paytm Mall appears to be more likely bet but SoftBank won’t mind backing Snapdeal, in case the Gurugram-based company reclaims the eroded marketshare (aka glory).
SoftBank owns 12 per cent in Paytm Mall while Alibaba Group owns a large part (about 50 per cent) in the online marketplace. Notably, the former has a majority share in Snapdeal.
The aforementioned shareholding structure and circumstances hint that SoftBank would likely to pour in the multi-billion round in Paytm Mall, Snapdeal and ShopClues (given its performance).
So far, SoftBank had backed 16 companies in India. With its staggering $100 billion fundsize, SoftBank Vision Fund has parked over $8 billion in past three years. While the Japanese group had slowed down its investment activities in 2016, it had placed mega bets worth $4.2 billion in 2017.
Last year, it had pumped-in $4 billion in two entities – Flipkart and Paytm payment as well as business.
Besides beefing up it’s positioning in horizontal e-commerce space, SoftBank also has invested multi-million back to back rounds in hotel brand Oyo and grocery e-tailer Grofers. It also holds a discussion with fintech major Policybazaar for potential investment before IPO plan.
Flush with confidence after Walmart-Flipkart deal, SoftBank seems bullish about Indian Internet commerce story. And, like in the past, it won’t hesitate in writing big size cheques to probable outliers in horizontal as well as vertical e-commerce domains.