E-commerce major eBay Inc received the stake in Flipkart in exchange for its eBay India business and a $500-million cash investment. In August this year, Flipkart had successfully completed its merger transaction to make eBay.in a Flipkart group company.
E-commerce major eBay Inc has secured a 5.4% stake in Flipkart, recent US Securities and Exchange Commission (SEC) filings by the company has shown. This comes on the back of eBay’s recent investment of over $500 million into Flipkart along with the selling of its India business unit to the latter. The regulatory filing on Friday also stated that eBay Inc has made a gain of $167 million on the selling of eBay India business to Flipkart. Tiger Global, Softbank and Naspers are the other leading investors in Flipkart. In August this year, Flipkart had successfully completed its merger transaction to make eBay.in a Flipkart group company. The deal was announced in April, when Flipkart raised $1.4 billion from eBay, Tencent and Microsoft.
In the filing, eBay Inc stated, “During the third quarter of 2017, we received a 5.44% ownership interest in Flipkart in exchange for our eBay India business and a $500 million cash investment, resulting in a cost method investment of $725 million. The gain on disposal of our eBay India business of $167 million was recorded in interest and other, net on our consolidated statement of income.”
This is eBay’s second big investment in the Indian e-commerce market. It had earlier invested in Snapdeal and during the second quarter of 2016, sold a portion of its equity interest in Jasper Infotech (Snapdeal), stated the recent SEC filing. Flipkart now owns and operates eBay.in. Both Flipkart and eBay are also partnering to leverage opportunities in cross-border trade. The partnership is thus providing a new opportunity for Flipkart sellers to expand their sales globally. Now that Snapdeal is rapidly losing its market share, Indian e-commerce market has become a three-pronged battle with Amazon, Flipkart and Paytm (backed by Alibaba).
Recently, Amazon.com infused $250 million into its Indian unit just ahead of the start of festive sale. Paytm E-Commerce also recently raised $200 million from Alibaba and venture capital firm SAIF Partners.