SoftBank agrees to sell 21% stake in Flipkart to Walmart
22 May 2018
SoftBank has finally agreed to sell its entire 21-per cent stake in Flipkart to US-based retail giant Walmart, ending weeks of uncertainty over its stake sale after the merger of online retailer Flipkart with US retail store chain Walmart, says a report in The Economic Times.
The Masayoshi Son-led Softbank had, in 2017, invested around $2.5 billion in Flipkart through the holding company's Vision Fund, after it failed to orchestrate a merger with Snapdeal.
Softbank had been in talks to retain its stake in Flipkart, considering that the sale may bring in issues pertaining to short-term capital gains and Vision Fund’s registration in Jersey, which does not have a tax treaty with India, say reports.
The Japanese company had invested about $900 million in Snapdeal in the hope that the etailer would be able to challenge Flipkart’s market leadership but saw the company slip to a distant third behind Amazon India by 2016.
Earlier this month Walmart announced plans to acquire a 77-per cent stake in Flipkart for about $16 billion.
India is a huge market for retailers and all major online and offline retailers, including Walmart, Amazon and China’s Alibaba are vying for a piece of the Indian market.
If SoftBank exits Flipkart, it could be freed from a clause in its agreement with Flipkart that restricts it from investing more than $500 million in Paytm Mall until 2020, ET had reported.
Softbank has already invested $400 million in Paytm and will now be free to invest the additional capital in Paytm Mall, posing another challenge in the online market place, say experts.