Are Tiger Global and SoftBank working out some sort of arrangement, wherein the former will trim its investment in India and the latter plans to increase it? We’ve today come across a fresh report stating that Tiger Global Management, one of the most renowned investors of the nation, is planning to sell its stake in homegrown ride-hailing giant, Ola Cabs, to SoftBank.
Both of the aforementioned behemoths are existing backers of the ride-hailing giant. The stake sale is presently being valued at over $700 million and is yet another alarming step for the country’s startup ecosystem. It suggests that one of the most prolific investors, who helped shape the current startup bigwigs and unicorns, now thinks differently of the country’s startup culture.
In response to speculations, the chief executive of a Tiger Global-backed company called the development as not surprising. It was further added:
SoftBank and Alibaba want to get a stronger hold of India’s internet businesses, and want a share in all the large companies — Ola is one of them.
The market has definitely matured and is now steadily accepting the importance of building a steady and streamlined business than senselessly doling out capital to achieve goals. Both Ola, as well as Flipkart, have been suffering from the lack of a fresh fundraising rounds for the past several months. They were unwilling to settle for a valuation lower than the one previously quoted to them. The same was further deteriorated by several valuation markdowns by prominent investment banks.
However, both of them recently picked up fresh investments at a valuation lower than they wanted to accept. While Ola picked up around $350 million in a couple recent funding rounds, which valued the ride-hailing giant at $3.5 billion, Flipkart added a hefty $1.4 billion to its coffers at a valuation of $11.6 billion. It is a massive drop from the $15 billion valuation it has picked up funds at.
The Flipkart fundraising round, however, helped the investor partly exit from the e-commerce giant by selling its stake to the newly added bigwigs, namely Tencent, Microsoft, and eBay. Tiger Global sold a chunk of its stake in the Bengaluru-based company and it was rewarded handsomely for its early investment. It is now planning to further reduce its holding in the e-commerce giant with the sale of its remaining stake to SoftBank — as part of Snapdeal’s rumored acquisition.
In addition, the Japanese telecom behemoth is also said to be aggressively pushing for the consolidation of homegrown e-commerce giant Snapdeal, which is its primary investment in the country. It has already initiated talks with another homegrown behemoth, i.e Flipkart, and the transaction is presently said to be in advanced stages.
While earlier reports suggested Flipkart had signed a non-binding agreement to acquire Snapdeal in the coming months, multiple reports now say that a binding term sheet has been finalized. The buyout process has been initiated and is pretty much a done deal and will be completed in the next couple months.
The only pointer up for debate is the valuation of the company, wherein the final price is likely to hover in the neighborhood of $1 Billion. This is quite lower than the $6.5 Billion valuation, the e-commerce giant was previously pegged at. SoftBank is expected to acquire a major chunk of Tiger Global’s stake, who presently holds about one-third of Flipkart. It has already bought out Snapdeal co-founders and early investor, Kalaari Capital. It is presently working out a final deal with another early investor – Nexus Venture Partners.
We’ve contacted all involved parties for more information and will update you once we hear back from them.