Published By : 14 May 2018 | Published By : QYRESEARCH
The Indian ecommerce sector is heating up with international giants and investors eyeing a slice of it, thanks to the increasing spending capacity of its people. After Walmart announced its decision to acquire Indian ecommerce giant Flipkart, a week back, Softbank is now in discussions to invest more in Paytm Mall, the online market place hived off from owner of Paytm, One97 Communications.
However, there is a hitch. SoftBank which holds a minority stake in rival e-tailing platform Flipkart, is required to sell it. This is because of a clause in its agreement with Flipkart that prevents it from pouring over US$500 million in Paytm Mall till 2020.
Earlier in April, SoftBank had announced an investment to the tune of US$400 million in Paytm Mall for a stake of 21 percent. Since then, it has been in discussion to invest around additional US$3 billion in the company.
Transaction Long Way from being Materialized
So far, a transaction is quite a long way from being finalized. Chances, it may not fructify. Besides, it would only move ahead only if SoftBank guaranteed its exit from Flipkart. However, SoftBank hasn’t yet made up its mind on selling its stake in Flipkart owing to two reasons: tax implications and a strong possibility of Flipkart’s valuation going up further.
The Japanese company had also invested around US$900 million in Snapdeal in the hope that the e-tailer would challenge the market leadership of Flipkart. But Snapdeal saw the company fall behind Amazon in a distant third position in 2016.