Flipkart may buy eBay's India operations as part of its $2bn fund raising: Report

eBay has failed to take the early move advantage in the fiercely competitive Indian e-commerce market

FP Staff March 24, 2017 12:45:52 IST
Flipkart may buy eBay's India operations as part of its $2bn fund raising: Report

Strengthening its position against the rising threat from the global biggies such as Amazon and China's Alibaba, the Bengaluru-headquartered ecommerce major Flipkart is likely to snap up US-headquartered eBay's India operations.

The move is part of the company's overall plans to raise $2 billion from a series of investors, including fund infusion from eBay in return for its operations getting acquired by the Indian etailer giant, a Factor Daily report said.

eBay launched its India operations in 2004, but failed to cash in on the early mover advantage before the Indian ecommerce sector became fiercely competitive with Flipkart and Amazon's entry. Over the years, the US ecommerce company languished behind the bigger rivals and stood a distant sixth in the pecking order behind Flipkart, Amazon, Snapdeal, Shopclues and Paytm, says the report.

To boost its operations in the growing online market in India, eBay made several attempts earlier to acquire New Delhi-based online marketplace company Snapdeal, but didn't succeed.

Flipkart may buy eBays India operations as part of its 2bn fund raising Report

Reuters

Finally, in order to stay relevant and compete with its US rival Amazon here, eBay's India arm decided to align with Flipkart.

Earlier in March, eBay had appointed Vidmay Naini as the new country manager in place of the incumbent Latif Nathani, who moved back to US after helming the position for more than a decade.

For Flipkart, the latest fund raising will see Chinese internet company Tencent infusing over $500 million, with eBay and Microsoft being other backers.

A Bloomberg report earlier this week said Flipkart has raised $1 billion from Microsoft, Tencent and eBay.

The fresh round of fund raising will value Flipkart around $10 billion, much lower than its peak valuation of $15.1 billion in 2015.

The company has so far raised more than $3 billion in funding, mostly from international investors. The fresh fund infusion likely to come at a time when the company is already facing stiff competition from the US ecommerce giant Amazon and China's Alibaba.

With no shortage of cash to spend, both the overseas e-tail giants have been making fast inroads into the country's multi-billion dollar online retail industry estimated to be around $15-$16 billion, and also threatening to dislodge Flipkart's number one position.

In the recent past, Flipkart's valuation was consistently marked down by its overseas investors due to high cash burn even as profitability remained elusive. In the current month, a mutual fund managed by Morgan Stanley had marked down the value of its holding in Flipkart for the fifth straight quarter, valuing the e-commerce major at $5.37 billion.

Last year, Morgan Stanley had marked down the value of its shares in Flipkart for the September quarter to $52.13 per share from $84.29 per share in March. Throughout last year, the Bengaluru-based firm has seen several markdowns by its investors like Valic Co, Vanguard, Fidelity and T Rowe Price.

Updated Date:

also read

One Mic Stand writers room on making stand-up sets for celebrities, and training them to be 'losers' on stage
Entertainment

One Mic Stand writers room on making stand-up sets for celebrities, and training them to be 'losers' on stage

"When you're doing stand-up, you have to believe that you're not the most important person in the room. That's what we have to explain to the celebrities. Some get it easily, but for some, it's a struggle," says Dhruv Deshpande from the writers room of One Mic Stand.

With Sardar Udham, Shoojit Sircar shows how a patriotic film can be made sans lies, loudness or hate
Entertainment

With Sardar Udham, Shoojit Sircar shows how a patriotic film can be made sans lies, loudness or hate

In a post-truth world, in an India where generating fake news pays rich dividends, Shoojit Sircar has chosen to recount a remarkable – and painful – true story with a reliance on facts and facts alone.

'Theatres are geared towards male-led films, I feel OTT is our space': says Jyothika, ahead of 50th film Udanpirappe
Entertainment

'Theatres are geared towards male-led films, I feel OTT is our space': says Jyothika, ahead of 50th film Udanpirappe

"I can’t imagine getting a release during a festival in theatres because hierarchy-wise, it would go to the men first," says Jyothika, whose 50th film Udanpirappe releases on Amazon Prime Video India on Dussehra