This investment assumes significance as SoftBank-backed Snapdeal last month called off merger talks with Flipkart. He also hinted that going forward there could be chances of Flipkart and Paytm, in which Softbank pumped in $1.4 billion this year, coming together as they have several synergies and use that to fight Amazon in India.
In its battle against global mammoth Amazon, the backing by two of the most prominent global investors - Tiger Global Management and now SoftBank - gives Flipkart a major boost in terms of improving their technology and strategising.
He also added that even then (if Flipkart and Paytm come together), it will be hard to topple Amazon. This investment makes Softbank, the second largest shareholder in the company.
In an indication of competition heating up, Flipkart said in a statement on Thursday that its cash reserves (read war chest) were now more than $4 billion, which it would use to build and launch a private label brand for consumer goods to improve profitability. "Harish HV, partner, Grant Thorton, believes the infusion is a vote of confidence for the Indian e-commerce industry".
"The funding round further solidifies Flipkart's balance sheet and will help accelerate investment in driving continued market leadership", it said. We want to support innovative companies that are clear winners in India because they are best positioned to leverage technology and help people lead better lives.
"This is a monumental deal for Flipkart and India".
Talking about the funding, Masayoshi Son, Founder and Chairman & CEO of SoftBank Group Corp said, "India is a land of vast opportunity". Citi served as financial advisor and AZB and Partners served as legal advisor to the SoftBank Vision Fund.
"The Vision Fund is proud to be part of this landmark transaction which is a strong endorsement of India and its thriving economy", added Rajeev Misra, CEO of the SoftBank Vision Fund. The addition of Dollars 2.4 billion takes the total amount the company has raised so far to USD 7.4 billion, the maximum amount mobilised by any domestic online platform.
An acquisition in these verticals will solve the difficulty of building a supply chain for these specialised categories, "To match up, Flipkart will have to invest at least as much as Amazon, and grocery will be important to increase wallet share", said Satish Meena, senior forecast analyst at Forrester. Snapdeal is a portfolio company of SoftBank.
Amazon, on the other hand, has been bullish on its plans for India.
This was especially significant as Flipkart is competing against the cash-rich Amazon.