Amid rising consolidation in India’s internet businesses, Japanese technology conglomerate SoftBank is in talks with venture capital firm Tiger Global to buy the latter’s stake in cab hailing firm, Ola, for about $700 million, according to a source.
Both SoftBank and Tiger Global are already investors in Ola.
SoftBank, Tiger Global, and Ola did not offer comment on this story.
Tiger Global, among the more aggressive VC firms in India, has been looking to pare its India investments since the past few quarters, according to sources among startups and this report. But, the general understanding was that the firm — also among the most reticent in the business — would hold on to its investments in Ola and online retailer Flipkart.
Tiger Global, among the more aggressive VC firms in India, has been looking to pare its India investments since the past few quarters, according to sources among startups
But, that stance may be changing, it appears. Tiger Global sold part of its stake in Flipkart in the Bengaluru company’s latest round of funding involving Tencent, eBay and Microsoft at a handsome return. It may be planning a further exit via a merger of Flipkart and Snapdeal, a deal that SoftBank is orchestrating.
And, today’s news about Ola adds to that trend of Tiger Global paring its India holdings.
A CEO of a company in which Tiger Global has invested called the Ola exit development “not surprising”. “SoftBank and Alibaba want to get a stronger hold of India’s internet businesses, and want a share in all the large companies — Ola is one of them,” the CEO said.
“SoftBank and Alibaba want to get a stronger hold of India’s internet businesses, and want a share in all the large companies — Ola is one of them” — a CEO of a company in which Tiger Global has invested
A Tiger Global spokesperson emailed us, “Mr (Lee) Fixel appreciates your interest but respectfully declines to comment.” Fixel is Tiger Global’s fund manager and partner, and is credited for his role in several Indian startups. One report described him as Flipkart’s godfather. Tiger Global owns nearly a third of Flipkart.
“We never comment on deals or negotiations,” said a SoftBank spokesperson on email. Ola did not respond.
Ola and Flipkart are part of a larger global consolidation of leadership as India’s internet usage zooms on the back of smartphone usage. The number of Internet users in India, second only to China, is projected to touch 450 million this summer.
As user growth flattens globally, leadership positions need to be secured there with need for more capital, explained the CEO on the possible reasons for the Tiger Global planned exits in India
As user growth flattens globally, especially in developed countries, leadership positions need to be secured there with need for more capital, explained the CEO quoted above on the possible reasons for the Tiger Global planned exits in India. While Tiger Global is invested in Flipkart and Ola, it has larger investments in rivals like Amazon and Uber.
SoftBank has an indirect relationship with Ola via a Chinese investment. It is a large investor in Didi Chuxing, in which Uber became a large shareholder after the US firm decided to hand over its China operations to the local rival after burning some $2 billion. Didi, in turn, is an investor in Ola.
Tiger Global’s first investment in Ola was in April 2012, worth $5 million, in its Series-A round. After that it has invested four more times in the company, alongside other investors. Details of the venture capital’s exact holdings in Ola are not available.
In April 2016, it was reported that Tiger Global has lost about a billion dollars with its investments in Indian startups.
Lead visual: Nikhil Raj
Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.
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