Softbank to capture 20% stake in both Flipkart and Paytm in India
In an interesting turn of events, Japan's richest man Masayoshi Son's company Softbank is in talks to capture around a 20% stake (estimated around $1 to $1.5 billion) in both Flipkart and Paytm, as reported by Economic Times.
Softbank eyes investment with Paytm and Flipkart
The move is interesting because in 2011, Flipkart wanted to rope in Softbank as an investor, which would have cost Son a few hundred million, rather than billions, for a similar stake. However, things didn't turn work out and Flipkart raised a funding round, led by South African media giant Naspers, in 2012 that valued it at $1billion.
Three years back, Son had invested $627m in Snapdeal but the result didn't meet expectations, a result of which is that they are now seeking a merger between Snapdeal and Flipkart. SoftBank plans to invest more than $1bn into the merged entity and is also in talks to invest a similar amount in Paytm.
India remains a lucrative market for Son as, according to a report from the Internet and Mobile Association of India and market research firm IMRB International, "The number of Internet users in India is expected to reach 450-465 million by June, up 4-8% from 432 million in December 2016."
The other big investor in Paytm is China's Alibaba group. According to commentators, both Softbank and Alibaba share a good relationship and want to co-exist, which is why they are eyeing a three-way merger. In 2000, SoftBank made an investment of $20 million in Alibaba. If the merger sees the light of the day, SoftBank will be one of the three largest investors in Paytm.