GIF Credit: Tenor
Also in this letter:
🏨 Restaurants escalate case against Zomato, Swiggy
💰 Trell raises $45 million, and other Done Deals
Flipkart’s valuation jumps to $37.6 billion
Flipkart has landed one of the largest financing by a private Indian company as competition intensifies in India’s ecommerce sector.
Driving the news: Flipkart has raised $3.6 billion in its first external funding round since it was acquired by Walmart in 2018. The deal values the company at $37.6 billion, up from the $24.9 billion valuation it commanded a year ago in a $1.2 billion internal round led by Walmart.
Who are the investors? The latest round was led by Canada Pension Plan Investment Board (CPP Investments), Singapore government’s sovereign wealth fund GIC, SoftBank Vision Fund 2 and Flipkart’s largest shareholder, Walmart. Existing backers such as Qatar Investment Authority, Tencent, and Tiger Global also participated.
Japanese tech conglomerate SoftBank has also re-entered Flipkart’s cap table after exiting the firm three years ago. The Masayoshi Son-led firm invested $2.5 billion in Flipkart in 2017 and sold its stake to Walmart a year later for $4 billion.
Esop buyback: Flipkart is also buying back employee shares worth over $80 million, providing liquidity to those who hold the company’s shares. Walmart is expected to have a stake of 74-75% in Flipkart after this funding round.
What’s the plan? Flipkart plans to use the money to expand operations and gain market share as the Indian online retail market sees rapid adoption amid the Covid-19 pandemic. Key areas of investment for Flipkart include groceries, fashion and consumables, and enhancing its supply chain and logistics network.
E-commerce rules: The investment comes as the consumer affairs ministry has proposed changes to India’s e-commerce rules. These include a ban on flash sales and curbs on in-house labels. Read our explainer on why e-tailers are upset over these draft guidelines.
Last week, the country’s largest e-commerce firms including Flipkart, Amazon India and Tata Group had told the government that they were concerned about the “related-party clause” in the draft regulations, which could prevent them from selling on their platforms, sources told us. They also sought until the end of July to submit their views, citing the “exhaustive and confusing“ nature of the draft rules, following which the government extended the deadline to July 21.
Meanwhile, Amazon suffered a brief global outage on Monday morning, which disrupted shopping across several of its country sites. The company later said it had resolved the issue but declined to comment on the reason for the outage.
Paytm gets shareholder nod for IPO
Digital payments firm Paytm is gearing up to file its IPO prospectus in the coming weeks, after receiving an approval from its shareholders to raise Rs 12,000 crore in fresh shares through the offering, sources close to the company told us.
Declassified as a promoter: Founder and chief executive Vijay Shekhar Sharma has also been declassified as a promoter to ease compliance requirements. He will continue as managing director and CEO of Paytm.
IPO details: Paytm aims to make its debut on the Indian exchanges in November. Apart from the Rs 12,000 crore primary raise, the IPO is expected to have a secondary element of around Rs 4,600 crore, which would likely take the total offer size to Rs 16,600 crore, one of the sources told us.
- The Noida-based firm is currently valued at $16 billion and is seeking a valuation in the range of $24-$30 billion for the IPO.
Last week, Paytm also rejigged its board, bringing in new members such as Ant Group senior vice president Douglas Lehman Feagin, Saama Capital managing partner Ash Lilani and SoftBank Vision Fund’s Vikas Agnihotri. Michael Yuen Jen of Alibaba and Todd Anthony Combs of Berkshire Hathaway left the board.
The company has also seen several high-profile executives quit, including president Amit Nayyar and chief HR officer Rohit Thakur. Both were from the new crop of leaders that Paytm hired after a number of senior executives left the company about a year ago.
Meanwhile, food delivery platform Swiggy has elevated long-time executive Phani Kishan to cofounder. He has been with the company for over six years and is currently vice president for strategy and investments.
The move comes after Swiggy COO Vivek Sunder stepped down from the company last week. Rahul Jaimini, who founded Swiggy along with Sriharsha Majety and Nandan Reddy in 2014, had left the company in May 2020 to join Pesto Tech, a career accelerator startup.
Last month, Swiggy’s IPO-bound archrival Zomato had also elevated long-time executive Akriti Chopra to co-founder. She was also named chief people officer.
Tweet of the day
Restaurants body escalates CCI case against Zomato, Swiggy
The National Restaurants Association of India (NRAI) has filed additional information about food aggregators Zomato and Swiggy with India’s anti-monopoly watchdog.
NRAI submitted what they said was evidence of alleged “anti-competitive” practices by Swiggy and Zomato. It said these practices have forced many restaurant owners to work in “extremely stressful conditions” and put many establishments on the verge of closure.
Catch up quick: Last week, NRAI had sought CCI’s intervention to resolve what it alleged were “anti-competitive practices” by the food aggregators. These include bundling of services, marking user data, charging high commissions, deep discounting, and lack of transparency.
- Last Thursday, when Zomato announced its plan to list on the national exchanges, CFO Akshant Goyal said NRAI’s concerns were “misplaced” in response to a question. He later said that sharing customer data with restaurants, another of NRAI’s demands, was not a good idea as it would leave the data open to abuse.
SoftBank gets CCI nod for Swiggy investment: SoftBank’s proposal to invest in Swiggy has received a nod from CCI, about a month after the Japanese tech conglomerate had sought approval.
Masayoshi Son-led SoftBank Group Corp was finalising a $450-million investment in the online food delivery platform at a pre-money valuation of $5 billion, ET reported on April 16. This will be its first bet on India’s food delivery sector, after more than three years of flirting with both Swiggy and IPO-bound Zomato. Read our explainer on the deal here.
The funding is an extension of Swiggy’s $800-million round in April 2021 that saw participation from investors such as Falcon Edge, Amansa Capital, Think Investments, Carmignac and Goldman Sachs.
WhatsApp faces EU complaints over controversial privacy update
Tell me more: The European Consumer Organisation (BEUC) and eight of its members have filed complaints with the European Commission and the European network of consumer authorities, saying WhatsApp is unfairly pressuring users to accept its new policies. The members include APC (Romania), Consumentenbond (the Netherlands), dTest (Czech Republic), Forbrukerrådet (Norway), KEPKA (Greece), EKPIZO (Greece), S.O.S. Poprad (Slovakia) and UFC-Que choisir (France).
What’s WhatsApp saying? The Facebook-owned messaging app said the complaint is “based on a misunderstanding of the purpose and effect of the update to our terms of service”.
The policy “does not expand our ability to share data with Facebook, and does not impact the privacy of your messages” but instead “explains the options people have to message a business on WhatsApp and provides further transparency about how we collect and use data,” WhatsApp said in a statement.
ETtech Done Deals
■ Ola Electric has signed a 10-year debt financing deal of $100 million with the
Ola Electric is building a 500-acre EV manufacturing site near Krishnagiri in Tamil Nadu, on the lines of Tesla’s Gigafactory in the United States. The plant is expected to have an annual capacity of 10 million units by mid-2022 and the company hopes to export its two-wheelers to Europe and Australia.
■ Influencer-led social commerce platform Trell has raised $45 million in a Series B funding round from Mirae Asset, H&M Group and LB Investments at a post-money valuation of $120 million. Existing backers along with KTB Network, Samsung Ventures, and Fosun RZ Capital also participated. Some early-stage investors sold stock worth $5 million. The startup has raised more than $62 million so far.
Trell plans to use the funds to strengthen its technology capabilities in regional languages, strengthen its supply chain, invest in influencer training, and expand its team from 400 to 1,000 people in the next 12 months.