Japan's SoftBank kicks off $10 billion India online spree, buys stake in Snapdeal

Tue Oct 28, 2014 9:25am EDT
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By Nivedita Bhattacharjee and Indulal PM

MUMBAI (Reuters) - Japanese telecom and media group SoftBank Corp has set its sights on Indian e-commerce in its aggressive expansion drive, saying it will invest about $10 billion in the booming sector as it took a strategic stake in one of its rising stars.

Masayoshi Son, chief executive of SoftBank, laid out a 10-year investment plan for India on Tuesday, starting with the purchase of a $627 million stake in fast-growing online marketplace Snapdeal. Son's global ambitions flared into public view last year when SoftBank bought No. 3 U.S. mobile carrier Sprint Corp for $21.6 billion.

The Snapdeal purchase comes as international investors hunt deals in online retail in India, which has the world's third-largest Internet user base but where e-commerce is still relatively underdeveloped. For cash-rich SoftBank, owner of a third of newly listed Chinese e-commerce giant Alibaba, the move is the latest in a series of deals designed to counter sluggish growth at home.

"I have a strong willingness to invest more like $10 billion in the next 10 years," Son said in an interview on Indian CNBC after his company announced plans to buy in Snapdeal, which connects small businesses with customers in an online marketplace. "I strongly believe that Snapdeal has the potential to be like the Alibaba of India."

In a separate deal announced on Tuesday, SoftBank said it will lead a $210 million investment round with existing investors in ANI Technologies Pvt. Ltd, which owns a mobile application for taxi bookings that competes with the likes of Uber.

SoftBank didn't disclose how big a stake it will have in Snapdeal, which will use funds to expand operations to compete with bigger, free-spending rivals Flipkart.com and Amazon.com.

The company did say it will become the biggest investor in Snapdeal, where sales of everything from clothes to computers have brought in around 25 million registered users and 50,000-plus merchants, attracting international shareholders like e-commerce operator eBay Inc and investment firm BlackRock Inc.

One person with knowledge of the deal told Reuters SoftBank will own about 30 percent of New Delhi-based Snapdeal, buying new shares in the firm, valuing all of Snapdeal at around $2 billion. Snapdeal declined to comment on the terms of the deal.   Continued...

A man holding an umbrella walks past the logo of Softbank Corp at its branch in Tokyo April 22, 2014. REUTERS/Yuya Shino