Flipkart raises $1.4 billion & acquires eBay India

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.

Tencent Holdings Ltd, Microsoft Corp and 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 it achieved at its last fundraising in 2015, reflecting how competition has intensified. India is the world’s fastest-growing internet services market as a rising middle class increasingly shops online.

Amazon announced last year it would invest over $5 billion in India, and has recently expanded into online video and grocery shopping in the country. 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, India’s third-biggest e-commerce player, 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 with Flipkart. The companies did not disclose the amounts invested by Microsoft and Tencent. Prior to the latest round, Flipkart had raised more than $3 billion in funding via 10 rounds, mostly from international investors. Sachin Bansal and Binny Bansal, two former Amazon employees, launched Flipkart in 2007 and the company’s biggest investor is U.S. hedge fund Tiger Global. Others include Accel Partners and Naspers Group.

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