Japanese telecom giant SoftBank today invested US$627 million in Indian ecommerce site Snapdeal, and US$210 million in taxi app Ola, formerly Olacabs.
The investments into Snapdeal and Ola are part of a whopping US$10 billion earmarked by SoftBank to pump into India’s booming ecommerce, telecom, and aviation industries. Masayoshi Son, founder and CEO of SoftBank, shared this investment plan when he met Indian prime minister Narendra Modi as well as IT and telecom minister Ravi Shankar Prasad in New Delhi on Monday.
“Since SoftBank’s foundation, our mission has been to contribute to people’s lives through the Information Revolution. We believe India is at a turning point in its development and have confidence that India will grow strongly 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,” Masayoshi Son said in a statement announcing the investment.
Ola’s existing investors – Tiger Global, Matrix Partners India, and Steadview Capital – participated in this latest investment round along with SoftBank. The investment-flush American entrant Uber has put Ola and other local on-demand taxi services in India under intense pressure in a price war. Just last week, Uber increased its discount for rides in Bangalore to 45 percent.
Snapdeal too has been on the hunt for a suitable investor ever since Indian ecommerce leader Flipkart raised US$1 billion in funding earlier this year, followed immediately by a US$2 billion cheque for Amazon India from Amazon founder Jeff Bezos. The entry of SoftBank, which is flush with funds, balances the equation.
Emerging markets with huge potential
SoftBank has a one-third stake in Chinese ecommerce giant Alibaba, whose recent IPO in the US made Son the richest businessman in Japan with a net worth of US$16.6 billion, according to the Bloomberg Billionaires Index.
Clearly, a significant portion of those new funds will go into emerging markets. As Nikesh Arora, vice chairman of SoftBank, explains: “India has the third largest Internet user base in the world, but a relatively small online market currently. This situation means India has, with better, faster and cheaper Internet access, a big growth potential. We want to support the leaders and entrepreneurs of the digital future.”
Bhavish Aggarwal, co-founder and CEO of Ola said, “Ola is at the forefront of the mobile internet revolution in India and Softbank as an investor and a strategic partner with its global network, brings in a lot of relevant experience and knowledge of this domain.”
Son is on a two-day visit to India, and more deals may be struck. Indian mobile commerce startup Paytm is also a candidate for a major funding.
“Japan’s richest businessman Mr. Masayoshi Son met me today. He expressed great optimism in India’s changed investment climate,” India’s IT and telecom minister said on his Facebook page.
Son is reported to have said during his meetings with Indian ministers that he expects Indian ecommerce to grow into a half-trillion-dollar business in the next 10 years. The Japanese telecom major already has a 50:50 joint venture with India’s Bharti Telecom – Bharti SoftBank is the backer of Indian messaging app Hike.
Indian prime minister Narendra Modi got assurances of US$35 billion in investment from Japan during his visit to Tokyo last month. The US$10 billion pledged by SoftBank in New Delhi on Monday suggests that the mark will soon be crossed.
Snapdeal bags $627M funding, Ola nets $210M, as SoftBank ploughs $10B into India
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