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SoftBank to take driving seat in Indian online shake-up

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Bank is close to finalising a cash infusion of more than $1 bn into digital payments firm Paytm

Reuters  |  Mumbai  May 7, 2017 Last Updated at 15:48 IST

After ploughing about $2 billion into minority stakes in Indian e-commerce businesses over the past few years, Japan’s is upping the stakes, looking to play consolidator and take a more active role at a trio of leading start-ups.


According to sources with direct knowledge of the matter, the solar-to-tech conglomerate is seeking to secure a piece of India’s industry leaders in everything from payment systems to online shopping and groceries, in a series of deals that would shake up the $65 billion sector.


Among the most high-profile plans is SoftBank’s push to engineer a merger between Snapdeal, the No 3 player in one of the world’s most competitive online markets and one of its biggest Indian to date, and market leader


The deal could be finalised as soon as next week, one of the sources said.


has poured roughly $1 billion into since 2014, but competition in e-commerce has risen dramatically with US giant Amazon cranking up its presence and taking the No 2 spot from


Besides Snapdeal, is also close to finalising a cash infusion of more than $1 billion into Alibaba-backed digital payments firm – another leader in a highly competitive sector – giving it a more direct say in that group too, according to one source familiar with discussions.


Media reports have separately linked to a tie-up between grocery delivery group Grofers, in which it has invested roughly $70 million, and market leader and rival BigBasket.


SoftBank, Snapdeal, and BigBasket did not respond to requests for comment. A spokesman for said the company did not comment on merger speculation.


“LAND OF OPPORTUNITY”

At the heart of the push is the charismatic Masayoshi Son, SoftBank’s founder and chairman, the sources said. Son has taken a more active role in the group globally since last year, when he pushed aside his heir apparent, Nikesh Arora.

is best-known for its hugely lucrative early stage bet in Chinese e-commerce giant Alibaba Group, in which it is still the single largest investor.

But it has also been a long-time supporter of – and with some success.

“Son is thinking is the place where he will create one or two Alibabas,” said one of the sources familiar with ambitions, adding Son sees the country right now as the “land of golden opportunity”.

is the biggest investor in India’s leading ride-share player Ola, which competes with Uber, and its top hotel aggregator Oyo. Son and other partners have also pledged to pour $20 billion into solar projects in the energy-hungry South Asian nation.

“They are getting into sectors where the big differentiator, firstly, is going to be technology, of course,” said the same source.

“Secondly, also sectors that need large amounts of capital, so you can browbeat or elbow out people with your capital.”

A Flipkart- combination would create just such a e-commerce behemoth.

Flipkart, though battling Amazon, has maintained its pole position and last month it raised $1.4 billion from a trio of cash-rich and tech savvy players that include eBay, Tencent and Microsoft.

It also bought eBay’s Indian operations as part of the deal.

Meanwhile, poured cash into Snapdeal, but Son began to lose patience as it was outpaced by Amazon, said a source at and the source familiar with SoftBank’s aspirations.

has already begun talks with Flipkart’s largest investor, Tiger Global, to buy a stake, the two sources said.

To push through the tie-up, was likely to invest about $1 billion in Flipkart, both via a direct cash infusion and by buying equity stakes in investors such as Tiger Global, another source said, adding that investors were expected to get one share for every 10 shares.

did not respond to requests for comment, while a spokeswoman for Tiger Global said the hedge fund did not speak to the media about its

FURTHER CONSOLIDATION

Forging all these deals could prove to be a challenge.

One source familiar with the Grofers-BigBasket talks said a deal, while being considered, looked unlikely as BigBasket has a cash-burn rate significantly higher than that of Grofers, making it hard to justify a deal.

Moreover, even if the deals do click, there is no guarantee bets like a Flipkart- combine will pay off.

“In the short-term, yes,” said Gartner analyst Sandy Shen. “But things move quickly in e-commerce and Amazon is a strong player with global scale, technology and operational expertise.”

Still, a Flipkart- combine is likely to revive hopes of a broader consolidation in Indian e-commerce.

Alibaba had explored the possibility of combining and Paytm’s e-commerce business with about a year ago, one of the sources said, but talks broke down over price.

Industry watchers believe that Paytm’s marketplace and Tiger Global-backed ShopClues could eventually fold into if the tie-up and investment goes through.

SoftBank to take driving seat in Indian online shake-up

Bank is close to finalising a cash infusion of more than $1 bn into digital payments firm Paytm

Bank is close to finalising a cash infusion of more than $1 bn into digital payments firm Paytm

After ploughing about $2 billion into minority stakes in Indian e-commerce businesses over the past few years, Japan’s is upping the stakes, looking to play consolidator and take a more active role at a trio of leading start-ups.


According to sources with direct knowledge of the matter, the solar-to-tech conglomerate is seeking to secure a piece of India’s industry leaders in everything from payment systems to online shopping and groceries, in a series of deals that would shake up the $65 billion sector.


Among the most high-profile plans is SoftBank’s push to engineer a merger between Snapdeal, the No 3 player in one of the world’s most competitive online markets and one of its biggest Indian to date, and market leader


The deal could be finalised as soon as next week, one of the sources said.


has poured roughly $1 billion into since 2014, but competition in e-commerce has risen dramatically with US giant Amazon cranking up its presence and taking the No 2 spot from


Besides Snapdeal, is also close to finalising a cash infusion of more than $1 billion into Alibaba-backed digital payments firm – another leader in a highly competitive sector – giving it a more direct say in that group too, according to one source familiar with discussions.


Media reports have separately linked to a tie-up between grocery delivery group Grofers, in which it has invested roughly $70 million, and market leader and rival BigBasket.


SoftBank, Snapdeal, and BigBasket did not respond to requests for comment. A spokesman for said the company did not comment on merger speculation.


“LAND OF OPPORTUNITY”

At the heart of the push is the charismatic Masayoshi Son, SoftBank’s founder and chairman, the sources said. Son has taken a more active role in the group globally since last year, when he pushed aside his heir apparent, Nikesh Arora.

is best-known for its hugely lucrative early stage bet in Chinese e-commerce giant Alibaba Group, in which it is still the single largest investor.

But it has also been a long-time supporter of – and with some success.

“Son is thinking is the place where he will create one or two Alibabas,” said one of the sources familiar with ambitions, adding Son sees the country right now as the “land of golden opportunity”.

is the biggest investor in India’s leading ride-share player Ola, which competes with Uber, and its top hotel aggregator Oyo. Son and other partners have also pledged to pour $20 billion into solar projects in the energy-hungry South Asian nation.

“They are getting into sectors where the big differentiator, firstly, is going to be technology, of course,” said the same source.

“Secondly, also sectors that need large amounts of capital, so you can browbeat or elbow out people with your capital.”

A Flipkart- combination would create just such a e-commerce behemoth.

Flipkart, though battling Amazon, has maintained its pole position and last month it raised $1.4 billion from a trio of cash-rich and tech savvy players that include eBay, Tencent and Microsoft.

It also bought eBay’s Indian operations as part of the deal.

Meanwhile, poured cash into Snapdeal, but Son began to lose patience as it was outpaced by Amazon, said a source at and the source familiar with SoftBank’s aspirations.

has already begun talks with Flipkart’s largest investor, Tiger Global, to buy a stake, the two sources said.

To push through the tie-up, was likely to invest about $1 billion in Flipkart, both via a direct cash infusion and by buying equity stakes in investors such as Tiger Global, another source said, adding that investors were expected to get one share for every 10 shares.

did not respond to requests for comment, while a spokeswoman for Tiger Global said the hedge fund did not speak to the media about its

FURTHER CONSOLIDATION

Forging all these deals could prove to be a challenge.

One source familiar with the Grofers-BigBasket talks said a deal, while being considered, looked unlikely as BigBasket has a cash-burn rate significantly higher than that of Grofers, making it hard to justify a deal.

Moreover, even if the deals do click, there is no guarantee bets like a Flipkart- combine will pay off.

“In the short-term, yes,” said Gartner analyst Sandy Shen. “But things move quickly in e-commerce and Amazon is a strong player with global scale, technology and operational expertise.”

Still, a Flipkart- combine is likely to revive hopes of a broader consolidation in Indian e-commerce.

Alibaba had explored the possibility of combining and Paytm’s e-commerce business with about a year ago, one of the sources said, but talks broke down over price.

Industry watchers believe that Paytm’s marketplace and Tiger Global-backed ShopClues could eventually fold into if the tie-up and investment goes through.

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