Flipkart acquires eBay India, raises USD1.4 Billion Funding from Tencent, Microsoft, eBay
Flipkart stuck two deals in one round,
acquiring eBay India business operations and closing a USD1.4 billion fund
raising from Tencent, eBay & Microsoft.
India: eBay began
operations in India in 2005. Flipkart has acquired ‘eBay.in’, its Indian
business segment and has agreed to make around USD500 million cash investment
for an equity stake in Flipkart, a largest e-commerce player in India. In
addition, post-acquisition, ‘eBay.in’ will perform as a separate entity from
Flipkart which would help in enhancing its consumer base and inventory to
expand sales across India.
With this deal, Flipkart’s post-transaction
valuation is USD11.6 billion. Flipkart's existing investors include Tiger
Global Management, Naspers Group, Accel Partners and DST Global. Post
acquisition of ‘eBay.in’ the valuation of Flipkart increased to USD11.6 billion
from USD15.5 billion in mid-2015 when it last raised funds from Tiger Global,
Qatar Investment Authority along with the existing investors. In 2016, Flipkart
has also seen several senior management changes and a string of layoffs.
Flipkart came in the market previously to raise around
USD1 billion but faced a tough fundraising environment and competition from
rival ‘Amazon’, which has committed to invest around USD5 billion in its India’s
operations.
According to TechSci Research, past few years,
online marketplaces like Flipkart and Amazon have increased their focus on
large brands and a few strong sellers to improve their customer base & experience.
Since inception, Flipkart has grown organically as well as through acquisitions
of fashion e-commerce players like Myntra & Jabong, and UPI-based payment
services app PhonePe. Currently, Flipkart is also in-talk with ‘Snapdeal’ for a
possible acquisition. The country’s e-commerce market is forecast to witness
staggering growth on the back of increasing working population and growing
number of middle class households, which is expected to reach around 53 million
by the end of 2015, and is further anticipated to double by 2025.
According
to a recent report published by TechSci
Research, “India
E-commerce Market Forecast & Opportunities, 2020”, the country’s e-commerce market is
projected to grow at a CAGR of more than 36% during 2015-2020. E-services
segment, which comprises online travel, online payments, online classifieds,
etc., is expected to continue its domination through 2020. However, the e-tail
segment that includes electronics, apparels & accessories, health and
personal care, etc., is expected to witness significantly higher market growth
compared to e-services segment over the next five years. During 2015-20, the
western region is expected to remain the largest e-commerce market in the
country. Major players operating in India’s e-tail market include Flipkart,
Snapdeal and Amazon.