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Flipkart acquires eBay India

As widely speculated, India's biggest e-commerce website Flipkart has acquired eBay India. The company announced this on Twitter. Flipkart has also raised $1.4 billion from Tencent, eBay and Microsoft. This is the biggest round of funding by an Indian internet company till date.

With this latest round of funding, Flipkart valuation has reached $11.6 billion and US software giant Microsoft joins the marketplace as a strategic investor.

In exchange for an equity stake in Flipkart, US-based eBay will make a $500 million cash investment and sell its eBay.in business to the e-commerce major. Bengaluru-based Flipkart will own and operate eBay.in business once the transaction is closed, which is expected by the end of this year.

eBay and Flipkart have also entered into an exclusive agreement in which they will jointly pursue cross-border trade opportunities. "We are delighted that Tencent, eBay and Microsoft — all innovation powerhouses — have chosen to partner with us on their India journey. We have chosen these partners based on their long histories of pioneering industries, and the unique expertise and insights each of them bring to Flipkart. This deal reaffirms our resolve to hasten the transformation of commerce in India through technology," Flipkart founders Sachin Bansal and Binny Bansal said in a press statement.

Tencent, a leading provider of internet value-added services in China, joins as a strategic investor in Indian e-tailer. Tencent is expected to lend significant expertise to Flipkart as the company furthers its leadership position across the e-commerce market in India.

Flipkart's much-anticipated and widely discussed fund-raise, comes after a slew of valuation markdowns by existing investors in the backdrop of Jeff Bezos-led Amazon snapping at its heels with a gargantuan war chest. The Indian e-tailer was valued at $15.2 billion when it last raised capital from existing investors in July 2015.

The $1.5 billion raise one of the the largest capital infusion for an Indian internet startup after Flipkart mopped up $1 billion in July of 2014. Flipkart's been on a fundraising trail since last year when it held talks with strategic players like Alibaba and Walmart. However, those discussions did not conclude in a deal.

The eBay India management is said to be under pressure from its board to sketch out a presence in emerging markets and backing Flipkart is surely a viable bet to take. eBay also has a small shareholding in Snapdeal, an investment that hasn't worked out.

The Flipkart Group owns several well-known Indian brands such as Myntra, Jabong, PhonePe and Ekart.

Kalyan Krishnamurthy, an ex-Tiger Global MD who took over the reins at Flipkart in June last year, is an ex-eBay executive. Flipkart's existing investors include Tiger Global Management, Naspers Group, Accel Partners and DST Global.

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