How SoftBank is steering e-commerce consolidation against Google, Amazon

Not just in India, global telecom giant SoftBank group, headed by Masayoshi Son, is out to consolidate the world’s e-commerce and telecom business against titans such as Google and Amazon, backed by its $100-billion Vision Fund. 

From e-commerce, ride-hailing, telecom, artificial intelligence, media, to solar power and even football, SoftBank is either making fresh investments or consolidating the investments it has already made in these areas. Recently, the group orchestrated the much-talked-about merger of ride-hailing biggie Grab with US cab aggregating giant Uber. After the takeover, the Silicon Valley-based company had to get out of Southeast Asia with a minority stake.

If Son’s grand plan works, the group would have invested in around 100 technology firms by the time the fund dries up. At this time, SoftBank is heading talks for at least three consolidation plans globally — Walmart and Flipkart deal, Ola and Uber merger as well as Sprint and T-mobile. It is also planning to invest in 30 technology firms across the globe. 

India play

SoftBank has been trying to consolidate the Indian e-commerce and ride-hailing segments for the past two years. The plans have finally started taking shape. According to insiders, the consolidation plans started in late 2016, when SoftBank began talks to merge beleaguered e-commerce firm Snapdeal with Bengaluru-based Flipkart. However, it failed to do so as it could not get consensus at the board level.

Since then, SoftBank has played its cards well. In the e-commerce and fintech space, the group has invested close to $8 billion — $1.8 billion in One97 Communications run Paytm, $2.5 billion in Flipkart and around $2 billion in cab aggregator Ola. 

Now, it is gearing up to consolidate the e-commerce and ride-hailing segments and is is in advanced stage talks with Walmart to sell close to 55 per cent of Flipkart’s stake to the retail giant for almost $12 billion. It is also, just like in Southeast Asia, trying to bring Ola and Uber to the table for a merger. Experts believe just like elsewhere it is planning to take on Google and Amazon in India. 

“The idea is to combine strengths of unicorns such as Paytm and Flipkart, mix it with the might of Alibaba and Walmart and fight a hard battle with Amazon and Google. While these two tech giants have almost unending resources and most importantly data, SoftBank is buying stake in every company that would help it compete at the same level,” said a senior executive of one of the Indian companies the group has invested in. 

SoftBank’s team

According to sources, SoftBank has a core team of 25-30 members helped by a battery of lawyers and big four consultants who look at mergers and acquisitions and consolidation. While finances of SoftBank Group International are handled by its Managing Director Kabir Misra, fund is looked after by Rajeev Misra, the fund’s chief executive officer.

“Kabir handled the Snapdeal merger talks, then funding Paytm. He is also said to be involved in Uber-Grab merger and is now holding talks between Walmart and Flipkart. Rajeev looks at what all firms the company can put money in. He is behind talks of a massive solar power project and is hand picking tech firms to invest in,” a source close to the company said.

Son himself is looking at a possible merger of SoftBank group’s debt-laden US wireless subsidiary Sprint with Deutsche Telekom’s unit T-Mobile. SoftBank refused to comment on a detailed questionnaire sent on the fund's operations and internal practices. 

Global investments

The fund is backed by Saudi Arabia and Abu Dhabi and has invested more than $36 billion over the past one year. The firm is backing Saudi Arabia as well as India’s ambitious solar power projects.  

It is leading a $535-million investment round in DoorDash, a food-delivery app based out of San Francisco, as well as planning to invest $150 million in Loggi, a Brazil-based platform that matches couriers to shippers.

Misra told the media some time back that the $100-billion Vision Fund would invest in another 30 companies over the next two years, adding to the 30 it has already invested in over the last year. It is also working on a $25-billion plan to create global football tournaments for FIFA and also plans to invest in slew of media houses in the near future.

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