SoftBank gets 60% return on its Flipkart investment

SoftBank, which held close to a 20% stake in Flipkart, had invested in the domestic online retail giant through its Vision Fund and its Delta Fund, in August last year. SoftBank gets 60% return on its Flipkart investment

Japan’s SoftBank Group Corp’s first quarter operating profit rose by more than 49%, boosted by gains from its $100 billion Vision Fund, after the world’s largest technology investor sold its stake in India’s largest e-commerce company Flipkart earlier this year.

For the quarter ended June 30, the Tokyo-headquartered strategic investment holdings giant posted operating profit of ¥715 billion ($6.42 billion), compared to a profit of ¥479 billion ($4.30 billion) in the year ago period. The Vision Fund has contributed ¥245 billion ($2.20 billion) over the same period, the company said.

In its statement, the Masayoshi Son-led company said SoftBank had realised a 60% return on its stake in Flipkart by selling its shares for an estimated $4 billion to American retail behemoth Walmart, having earlier pumped in $2.5 billion in the Bengaluru-based company last August.

As part of the sale of its stake in Flipkart, SoftBank said it has recognised deferred tax of ¥71,746 million ($645,000).

“The Company estimates that the sale of Flipkart shares will occur within 24 months of the inception of the investment and has calculated the deferred tax at 43.68%, being the Indian short-term capital gains tax rate expected to apply to the sale of Flipkart shares,” it stated in its consolidated financial report for the first quarter ended June 30th.

SoftBank, which held close to a 20% stake in Flipkart, had invested in the domestic online retail giant through its Vision Fund and its Delta Fund, in August last year. The sale of its stake in the company is also the first monetisation of an investment made by the Vision Found since its inception.

In May earlier this year, Walmart acquired Flipkart for $16 billion, picking up a 77% stake through the sale, which was also the largest ecommerce transaction globally.

Separately, the Vision Fund, the world’s largest pool of private capital, and which counts Saudi Arabia’s Public Investment Fund, Mubadala Investment Company, Apple, Foxconn Technology Group, Qualcomm and Sharp Corp as its backers, has invested $27.1 billion in 29 companies at the end of June.

The investment are worth $32.5 billion, SoftBank said in the quarterly consolidated financial statement

The Japanese investment giant has been doubling down on India over the last 12 months, having picked large stakes in a number of companies, such as hospitality company OYO, online insurance aggregator PolicyBazaar, ride-hailing app Ola and online payments venture Paytm – all of which are market leaders in their respective segments.

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