Flipkart acquires eBay India business to fight Amazon

Apr 11, 2017 12:00 IST

India’s largest online retailer Flipkart on 10 April 2017 raised a total fund of USD 1.4 billion from China’s Tencent, US-based e-commerce firm eBay and software maker Microsoft.

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Moreover, it also acquired eBay’s Indian operations in a move to build a ‘mahagathbandhan’ of global tech giants to counter Amazon.

This new funding round valued Flipkart at  USD 11.6 billion now. This is about 24 per cent lower than the USD 15.2 billion valuation it got in 2015 based on the funds it raised at that time.

Highlights of the funding

• Tencent will be a strategic investor for the company, bringing experience in linking social networking and e-commerce. Tencent will lend significant expertise to Flipkart as it seeks to bolster its leadership position in India’s e-commerce market.
• Earlier in February 2017, Microsoft had announced a strategic partnership with Flipkart where Flipkart adopted the Microsoft Azure cloud computing platform.
• On the other hand, eBay’s investment is accompanied by a strategic commercial agreement, eBay will make a USD 500 million cash investment and sell its eBay India business to Flipkart. Flipkart and eBay also entered into an exclusive pact in which they will jointly pursue cross-border trade opportunities.

Comment
Flipkart has been a resourceful acquirer as it bought rivals Myntra, Jabong earlier and now eBay.

This funding deal is expected to give Flipkart leverage to counter Amazon, the world’s largest online retailer. Amazon has pledged to invest USD 5 billion in India in the next few years.

This latest investment adds to an existing group of investors of Flipkart that include Tiger Global Management, Naspers Group, Accel Partners and DST Global.

Quick Digest

Who: Flipkart

What: Acquired eBay India business

When: 10 April 2017

Is this article important for exams ? Yes
Read more Current Affairs on: Flipkart , eBay India , Tencent , Microsoft , Amazon

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