Ahead of its ambitious target, SoftBank invested $7.2 billion in 4 years in Indian startups
We are open to good offers for Flipkart: SoftBank founder Masayoshi Son
NEW DELHI: True to his reputation and grand ambitions, Masayoshi Son’s investments in India are running ahead of his original target. In 2014, the founder-chairman of Japan-based global internet and telecoms giant had announced plans to invest $10 billion in ten years in the country. Four years down the line his investments have already topped $7.2 billion (about Rs 47,000 crore), which include its stakes in India’s largest startups—Flipkart, Paytm, and Ola .
Having aggressively backed Indian tech startups since 2014, SoftBank now plans to double down with a local investment team for its $100 billion Vision Fund. That’s despite some of its bets like Snapdeal and Housing.com not having worked out. “We were excited to invest in Snapdeal. It is unfortunate that it did not do well. But we made an investment in Flipkart after that. We are extremely happy with its progress,” Son said in an interaction with TOI. The opportunity in India is still massive, said the 60-year-old shortly before his meeting PM Narendra Modi on Sunday.
SoftBank upended the global investing ecosystem last year with its $100 billion Vision Fund, as So reshapes his telecoms group into a technology investing powerhouse . Led by India-born Rajeev Misra, the SoftBank Vision Fund (SVF), which is the largest pool of private capital globally, has been driving consolidation, ploughing billions into companies across robotics, e-commerce and on-demand transportation.
“Just one year ago, before we launched the Vision Fund, people said, ‘Masa, you are crazy’, the fund is too big to give good returns. But we are doing fantastically well,” said Son famous for backing Jack Ma’s Alibaba with $20 million back in 2000. On the back it, SoftBank registered a jaw dropping 44% internal rate of return in the last 18 years–growing the value of its investments from $18 billion to $260 billion.
In the past one year since being officially launched, SVF has invested across 36 technology companies and is reportedly raising another $100 billion to add to its corpus. In India, SoftBank has stakes in Flipkart, Ola, Oyo Rooms, Paytm, Paytm Mall and Grofers through its balancesheet and SVF.
SoftBank says it doesn’t dictate what its portfolio companies should do
In less than a year, SoftBank may partially exit Flipkart as final negotiations are ongoing between Walmart and the domestic e-tailer for a $8-10 billion investment. The deal will likely see most early investors, partially or fully sell their stakes to the world’s largest brick-and-mortar retailer. “We are studying and discussing it. We do not have control but are definitely an interested party. We are involved in discussions with key shareholders and the management. Either way we are happy. It is nice to have good offers and we are always open to discussing different angles as we are always flexible for a good return and the success of the company.” SoftBank holds about 23-24% in Flipkart as its largest shareholder, followed by the New York-based investment fund Tiger Global and South African internet and media giant, Naspers.
On the much-talked about Uber-Ola merger possibility, Son said, “We can’t comment, but Bhavish (Aggarwal, Ola co-founder & CEO) is a great entrepreneur. I love him and he is fantastic. You have to understand the sequence, we first invested in Ola in 2014, then we invested in Uber last year. Our investment in Uber was for the US market. As a result we have two companies which compete. We have to see how it evolves and be flexible for a better outcome.” Since picking up a 15% stake in Uber last year, Softbank has brought about consolidation in the ride-hailing industry. Recently, Uber exited Southeast Asia after merging with Grab, its bigger rival. There were reports in the international media about SoftBank’s plans to roll up more than $20 billion in shareholding across Uber, Ola, Grab and Didi Chuxing, into the technology fund.
Dismissing the narrative that SoftBank likes to have an authoritative position in companies so that it can orchestrate consolidation in big sectors, Misra, 56, a finance veteran who built Deutsche Bank’s credit-derivatives business , said the group doesn’t interfere in day-to-day operations of its portfolio firms. “We are not the controlling party, we support the entrepreneurs and management. We are the largest shareholder in almost all in our investments but we don’t dictate what the companies should do,” he said.
Son, who has been a fervent supporter of local entrepreneurs, said that he continues to believe that Indian founder will make it big independently. Yes, local entrepreneurs are key to the success of startups. If founders become a part of a big organization, you lose the soul and the passion. Management and employees come behind local leaders, so it is important to keep the soul in a company whichever way it goes, he said.