Japanese telco Softbank has agreed to pay US$627m to become the largest shareholder in Indian e-commerce company Snapdeal, kick-starting its planned US$10bn investment in the Indian e-commerce sector over the next decade.
Subsidiary Softbank Internet…
Japanese telco Softbank has agreed to pay US$627m to become the largest shareholder in Indian e-commerce company Snapdeal, kick-starting its planned US$10bn investment in the Indian e-commerce sector over the next decade.
Subsidiary Softbank Internet and Media (SIMI) said in a statement that its strategic investment and partnership with Snapdeal, which it claims is the largest and fastest growing online marketplace in India with more than 25 million registered users, is designed to strengthen its presence in India and leverage synergies with other internet subsidiaries internationally.
The size of the stake to be acquired was not revealed. One news agency cited a person with knowledge of the deal as saying the telco will buy new shares to gain a 30% holding, valuing Snapdeal at about US$2bn.
Commenting on the deal, Softbank CEO Masayoshi Son said his company believes India is at a “turning point” in its development and will exhibit strong growth over the next decade.
“As part of this belief, we intend to deploy significant capital in India over the next few years to support development of the market,” he added.
In an interview with CNBC in India today, Son said he wants to invest “more like US$10bn” over the next 10 years, adding that he believes Snapdeal has the potential to become the “Alibaba of India”.
Nikesh Arora, vice chairman of Softbank and CEO of SIMI, noted in the company’s statement that while India has the world’s third-largest number of internet users, its online market is relatively small, presenting big growth potential.
“With today’s announcement, Softbank is contributing to the development of the infrastructure for the digital future of India.”
Arora will join the board of Snapdeal, founded by entrepreneurs Kunal Bahl and Rohit Bansal in 2010, as part of the deal.
Morrison & Foerster were Softbanks’s legal advisers for the deal, while Kochhar & Co advised it on Indian legal matters.
Also today, SIMI announced it would lead a US$210m investment in India’s ANI Technologies (Ola Cabs), which owns and operates a mobile taxi booking app.
Arora will also join the board of Ola, which hosts more than 33,000 vehicles across 19 major cities on its app.
Morrison & Foerster also provided legal advice to Softbank on this deal, while Raine Groupe acted as its financial adviser.
These two deals mark the latest in a string of online and media content investments for the Japanese operator and the fourth and fifth such international investments since Arora, formerly Google’s chief business officer, joined the company in July.
Earlier this month, Softbank announced plans to invest US$250m to create a joint venture with US-based media giant Legendary Entertainment, snapped up Korean online video service DramaFever for an undisclosed sum, and agreed to lead a US$100m investment in Indonesian e-commerce firm Tokopedia.
