Japan's SoftBank has forked out more than US$800 million for two Indian e-commerce companies, Snapdeal and ANI Technologies, as part of its 10-year investment plan for India.
The telecoms giant said it had agreed to pay US$627 million for a stake in Snapdeal to become the biggest investor in the Indian online shopping website, which other investors include reported Reuters. However, it cited one source to say the Japanese investor would own about 30 percent of Snapdeal.and . Expected to be completed by end-November, the deal is expected to push Snapdeal's valuation to an estimated US$2 billion, but both companies did not reveal how much shares SoftBank would own,
The Indian e-commerce operator, which has some 25 million registered users and 50,000 merchants, said the funds would go toward expanding its operations in the face of increasing competition fromand .
Kunal Bahl, co-founder and chief executive of Snapdeal, told Reuters the SoftBank deal took just three weeks of negotiation. "Most of the capital investment we're going to make is in technology," he said, adding that some US$250 million will be spent next year. He said the company is opening an innovation center in Bangalore next month with plans to hire some 500 engineers.
The e-commerce operator clocks annual sales of US$1 billion and had generated US$350 million in funds since its launch in 2010.
Apart from Snapdeal, SoftBank said it would lead a US$210 million investment round for ANI Technologies, an Indian website offering cabs and car rental services as well as a mobile app for taxi bookings. It is also commonly known as Ola Cabs.
The announcements come amid a promise from the Japanese telco's chairman, Masayoshi Son, to commit US$10 billion into India over the next few years, specifically, its e-commerce sector. In New Delhi this week for a visit, Son met with India's Telecoms and IT Minister and Prime Minister Narendra Modi to outline the company's investment plans in the country.
"We believe that India is at a turning point in its development and have confidence that India will grow strongly over the next decade. As part of this belief, we intend to deploy significant capital in India over the next few years to support development of the market," he said in a statement.
He noted in an interview with CNBC in India: "I have a strong willingness to invest more like US$10 billion in the next 10 years. I strongly believe that Snapdeal has the potential to be like the Alibaba of India."