* Indian e-commerce firm Flipkart raises $1.4 bln in funding
* Tencent, Microsoft and eBay invest in Flipkart
* Flipkart to acquire eBay's India business
(Updates to add more detail, Flipkart spokeswoman comment,
MUMBAI, April 10 (Reuters) - India's top e-commerce firm
Flipkart has raised $1.4 billion in its biggest
fundraising to date as it takes on U.S. tech giant Amazon.com
Inc for a larger share of the country's burgeoning
online retail market.
Chinese social media and entertainment firm Tencent Holdings
Ltd, the world's biggest software company Microsoft
Corp and online marketplace eBay Inc
participated in the funding round, Flipkart said in a statement
on Monday, which will value the Indian company at $11.6 billion.
That is lower than the $15 billion valuation achieved at its
last fundraising in 2015, reflecting how competition has
intensified in the e-commerce sector as companies vie for a
slice of the world's fastest-growing internet services market.
Amazon last year said it would invest over $5 billion in
India, and has recently expanded into online video and grocery
shopping, seeking to expand aggressively in a country where a
rising middle class is increasingly shopping online.
The fundraising also comes amid speculation Flipkart may be
interested in a takeover of smaller rival Snapdeal. Local media
have reported SoftBank Group is keen to sell its stake
in Snapdeal in exchange for a stake in Flipkart.
"We are delighted that Tencent, eBay and Microsoft - all
innovation powerhouses - have chosen to partner with us on their
India journey," Flipkart's founders Sachin Bansal and Binny
Bansal said in a statement.
"This deal reaffirms our resolve to hasten the
transformation of commerce in India through technology."
As part of the fundraising, eBay invested $500 million in
Flipkart for a stake, according to a separate statement by both
companies. In exchange, eBay will merge its India operations
A Flipkart spokeswoman said eBay.in will continue to operate
as a "separate business" within the Flipkart group, which
includes fashion portals Myntra and Jabong.
The company will assess capital requirements across the
group and use the new funds to "add value to customers, increase
shareholder returns and bring us closer to profitability," the
Ebay, one of the pioneers of online commerce in India, runs
a marketplace selling everything from bed sheets to smartphones
but with little marketing and few exclusive launches on its
India portal sales have lagged behind Flipkart and Amazon.
Flipkart did not disclose the amounts invested by Microsoft
Prior to the latest round, Flipkart had raised more than $3
billion in funding via 10 rounds, mostly from international
investors but it has burnt through cash in a competitive market.
In January, Flipkart appointed a former Tiger Global
Management executive as its CEO in its biggest management
reshuffle as it tried to focus on margins over sales volume.
U.S. hedge fund Tiger Global is Flipkart's biggest investor,
owning about a third of the company.
A deal with Snapdeal would provide Flipkart with added heft
to compete against Amazon.
A distant third player, Snapdeal has declined to comment on
sale talks and said that it remains focused on achieving
profitability, but recent layoffs have heightened speculation
about a takeover.
Research firm Gartner called Flipkart's fundraising a
"This is good news for Flipkart as it solidifies it as a
market leader at least in the short term, keeping competition
especially Amazon at bay," said Sandy Shen, research director at
"Flipkart has been and will continue to make acquisitions to
increase scale, and the next challenge is to strategize the path
to a sustainable business model within a set timeframe."
(Editing by Rafael Nam and Susan Fenton)