Indian e-commerce firm Snapdeal has procured $627 million investment from SoftBank Internet and Media, Inc. (SIMI).
The deal makes SoftBank the largest investor in Snapdeal. It is also the largest investment made by a single investor in an e-commerce company in India.
Recently Flipkart, another e-commerce major in India, raised US $1 billion co-led by existing investors Tiger Global Management and Naspers, making it the largest such investment in the country.
The investment in Snapdeal is part of SoftBank’s $10 billion commitment in Indian e-commerce sector, which was conveyed by SoftBank CEO Masayoshi Son to Indian Prime Minister Narendra Modi and Telecommunications Minister Ravi Shankar Prasad.
The investment further confirms the market traction e-commerce companies gaining in India. For Snapdeal, this is the second investment in a period of two months, the latest being an undisclosed personal investment by Ratan Tata.
Overall the company has raised “close to $1billion this calendar year,” say company officials.
Earlier in February, Snapdeal raised $133.77 million as a result of a round led by eBay and $105 million in May 2014 as result of a financial round which saw participation from institutional investors – Temasek, Myriad, Tybourne, Blackrock and Premji Invest.
Snapdeal will use the investments to ramp up efforts in technology and supply chain management.
The company plans to open innovation centers across the country. Snapdeal currently has two such centers – in Delhi and Bangalore – and plans to open the next in Hyderabad and Pune.
The company will also double its technology team size to 1000 people by the end of the current financial year.
To strengthen its Supply Chain efforts, Snapdeal looks to expand its fulfilment centers to 30 cities, from the current count of 40 centers in 15 cities.
With the vision to enable SMBs in India to do business online, Snapdeal.com aims to expand its merchant base to 1 million in the next 3 years.
The setting up of fulfilment centres is in line with the same as it will not only enrich the shopping experience for buyers but will also further enable SMBs that do not have the necessary resources to handle deliveries at their end.
Further, Snapdeal.com will look to make 3-4 strategic acquisitions in the coming few months specifically in the area of mobile technology.
With mobile commerce fast gaining pace in the country, Snapdeal.com within the next 6 months, will also set up an incubation centre to hone and harness start-up businesses in the mobile technology space, the company said.
SoftBank Group, the mobile and Internet services provider, also has 34.4 percent in Alibaba and raised $57.8 billion through its IPO.
The investment in Indian firm aligns with the company’s strategy to invest in prospective Internet businesses across the world.
Announcing the investment in Snapdeal, Son said, “Since SoftBank’s foundation, our mission has been to contribute to people’s lives through the Information Revolution. We believe 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.”
Kunal Bahl, Co-founder and CEO of Snapdeal said the investment will help them create life changing experiences for 1 million small businesses in India.
Nikesh Arora, vice chairman of SoftBankCorp and CEO of SIMI, will be joining the board of Snapdeal as part of this strategic investment by the SoftBank Group.