"This is the biggest ever private investment in an Indian technology company and will make the Vision Fund one of the largest shareholders in Flipkart", Flipkart said here in a statement.
After this financing round, Flipkart will have in excess of $4 billion of cash on its balance sheet. Snapdeal is backed by SoftBank. Didi Chuxing has raised 5 Bn USD and increased its total fund to $15 Bn in April.
Flipkart's current valuation of about $15 billion places it at the ninth position on the list of highly funded companies.
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People familiar with the deal said the investment is worth $2.5 billion, with about $1.5 billion being directly funneled into Flipkart and $1 billion for part of Tiger Global Management's stake. The homegrown e-commerce company has to date raised nearly $7 billion in capital, higher than that raised by global behemoths like online house rental aggregator Airbnb ($3.3 billion) and mobile phone maker Xiaomi ($1.4 billion).
"The funding round further solidifies Flipkart's balance sheet and will help accelerate investment in driving continued market leadership", it said. Two people close to the negotiations said the share swap between Snapdeal (domiciled in India) and Flipkart (registered in Singapore) would have led to an extremely inefficient taxation structure due to restrictions arising out of laws in India, causing millions of dollars of tax burden to multiple investors.
"Since Flipkart has been the flag-bearer for the local ecosystem, this reinforces the positive belief around the long-term India opportunity", Nitin Sharma, principal and founding member at early-stage VC fund Lightbox told ET. The completion of the investment in Flipkart is subject to customary regulatory approvals and closing conditions. Very few economies globally attract such overwhelming interest from top-tier investors. LLC served as financial advisor and Gunderson Dettmer LLP served as legal advisor to Flipkart. "We want to support innovative companies that are clear winners in India". Citi served as financial advisor and AZB and Partners served as legal advisor to the SoftBank Vision Fund.