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SoftBank Makes $3.5 Billion Bet On Fanatics, Flipkart

SoftBank Makes $3.5 Billion Bet On Fanatics, Flipkart

SoftBank Group is investing a combined $3.5 billion in Indian e-Commerce company Flipkart and sports apparel and merchandise retailer Fanatics. Nearly $2.5 billion of that investment will go to Flipkart, with SoftBank Group Chairman Masayoshi Son becoming the company’s biggest shareholder, the companies announced in a statement.

SoftBank’s investment is massive, particularly considering the company apparently took a $1.4 billion loss on investments in its most recent fiscal year, largely from its $627 million funding of Indian e-Commerce marketplace Snapdeal. But this move shows the Japanese tech giant is more than willing to back e-Commerce retailers it deems fit enough to compete with Amazon.

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The investment boosts Flipkart’s cash holdings to more than $4 billion and comes less than two weeks after Snapdeal walked away from a proposed merger with Flipkart.

The bulk of the $3.5 billion investment reportedly comes from SoftBank’s nearly $100 billion Vision Fund, the world's largest private equity fund.

The $1 billion Fanatics investment is part of a funding round that values the e-Commerce company at $4.5 billion, according to an initial report from The Wall Street Journal. Neither of the parties involved have confirmed the investment or the total.

The Fanatics deal reflects SoftBank’s belief that the company has built an e-Commerce business that can withstand the pressures of Amazon, particularly because of its close relationship with various professional sports leagues. The National Football League and Major League Baseball have invested $95 million and $50 million respectively into the retailer.

Fanatics also benefits from having exclusive rights to sell and manufacture licensed merchandise, having signed long-term licensing agreements through at least 2030 with four major U.S. sports leagues.

Fanatics expects to generate $2.2 billion in revenue in 2017, with approximately three-quarters coming from direct-to-consumer sales from Fanatics.com or the 200+ team and league sites the retailer operates.

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