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Business

SoftBank to pump $650M into India's Snapdeal

TOKYO -- SoftBank will invest $650 million in Snapdeal to gain a 30%-plus stake in the Indian e-commerce giant, apparently with a vision of turning it into a "second Alibaba."

     An agreement will likely be reached as early as this month. Snapdeal will issue new shares, with the Japanese company purchasing a portion in a private placement. Such existing stockholders as eBay of the U.S. will also likely buy new shares. Snapdeal plans to apply the proceeds toward strengthening its logistics network and other purposes.

     Snapdeal has grown rapidly since its 2010 founding and now boasts more than 25 million members. The company sells more than 5 million items, including apparel, electronics and other household goods. But it does not disclose sales and profit figures.

     The Japanese mobile carrier has been beefing up smartphone-related operations in India via a joint venture with local peer Bharti Airtel through such means as investing in chat app developer Hike. The company will likely seek synergies between such operations and Snapdeal in the future.

     The Indian market for online shopping is expected to grow 14-fold between this year and 2020, reaching $32 billion then, according to local consultancy Technopak Advisors. The country's lack of general merchandisers and the rise of smartphones are prompting consumers to shop on the Internet.

     Snapdeal rivals Flipkart and Amazon.com, one Indian and the other based in the U.S., have been going on the offensive to expand via acquisitions and other investments. So all eyes were on Snapdeal's move.

     SoftBank invested 2 billion yen ($18.7 million at current exchange rates) in Alibaba back in 2000, when it was just formed. The Chinese e-commerce company has since grown significantly and debuted on the New York stock market last month. SoftBank now has some 7.3 trillion yen in unrealized gains on its stake of more than 30%.

(Nikkei)

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