SoftBank Group Corporation has reportedly announced that it is likely to sell its twenty-one percent ownership stake in Flipkart to Walmart. The strategic move will help Walmart fulfill its dreams of acquiring nearly 77% of stake in India’s biggest retail firm. For the record, SoftBank, which has invested nearly USD 2.5 billion in Flipkart via its Vision Fund last year, has stated that its current investment in the Indian retail firm is estimated at nearly USD 4 billion.
Sources cite that even if SoftBank had not sold its ownership to Walmart, the latter would have invested USD 3 billion in Flipkart that might have diluted the shares of other investors.
It has been reported that Flipkart is in discussions with Alphabet Inc., Google’s parent firm for a potential investment in the firm. Earlier this month, Walmart had proclaimed that it was aiming to purchase 77% of Flipkart’s shares for nearly USD 16 billion. The world’s largest supermarket chain has also revealed that USD 14 billion of this amount would be spent on purchasing shares of Flipkart’s investors such as Tiger Global and Naspers. The remaining USD 2 billion will be expended in the company itself, claim reliable sources.
SoftBank’s Vision Fund had made investments worth nearly USD 30 billion in startups last year. Masayoshi Son, the CEO of SoftBank, has stated that the firm is also looking for other alternatives. Apparently, SoftBank had discussed about investing in the Paytm Mall as it would then be freed from a clause in its contract with Flipkart that prevents the company from pouring in more than USD 500 million in Paytm Mall until 2020.
As per sources familiar with the matter, SoftBank had invested nearly USD 400 million in Paytm, and it is likely to invest another USD 1.4 billion in One97 Communications, Paytm’s owner, after its divestment from Flipkart.