20/12/2014 2:54 PM IST | Updated 15/07/2016 8:24 AM IST

Flipkart Raises $700 Million In Fresh Funding

Bloomberg via Getty Images
Flipkart's application loading page, left, and the website are displayed on an Apple Inc. iPhone 5c and iPad respectively an arranged photograph in Hong Kong, China, on Wednesday, May 21, 2014. Flipkart, India's largest online retailer, will buy competitor, according to people with knowledge of the talks, to gain a business with higher margins and strengthen its position in the local market against Inc. Photographer: Brent Lewin/Bloomberg via Getty Images

Flipkart, India's largest e-commerce company, today announced it has raised a fresh $700 million in funding from a host of investors.

The online retailer also said its holding company Flipkart Limited - incorporated at Singapore - has filed with ACRA Singapore for conversion to a Public Company. This became necessary as the number of shareholders of the company rose above 50. There is no plan for an IPO, the company said.

Including this round of funding, Flipkart has raised $1.91 billion this year. Its investors include Baillie Gifford, Greenoaks Capital, Steadview Capital, T. Rowe Price Associates,​ and Qatar Investment Authority, which came aboard in this round. That adds to its existing investor base of DST Global, GIC, ICONIQ Capital, and Tiger Global.

The Indian e-commerce space boomed last year as global giants decided to go all out for this market. Worldwide leader Amazon pumped in $2 billion in its Indian arm, while Japan's Softbank invested $627 million in local player Snapdeal. Unlike in China, where Alibaba dominates, India has significant untapped potential. More funds allows these companies to offer deeper discounts, expand their logistical reach and buy start-ups to scale up quicker. Flipkart, Amazon and Snapdeal are the top three Indian players in terms of funding and are fighting a hotly contested battle to gain marketshare.

Flipkart has used some of the funds to hire and added more than 6,000 employees in last 6 months. In July, the company raised $1 billion, with roughly half of it coming from Tiger Global and Naspers. This was the largest ever financing round by an Indian start-up and among the top among start-ups globally.

None of them are profitable, following the Amazon model in the US. Investors hope for windfalls later, because of the burgeoning market. Online retail, which is worth $3.1 billion, or just 0.6% of the overall retail market in India, is expected to surge to $22 billion over the next five years, according to a November 2013 report by brokerage CLSA.

Amazon surely wants to make sure it does better in India than in China, where local giant Alibaba beat competition to emerge as a clear dominant player. Amazon CEO Jeff Bezos was in India in September, and the company has argued for easing up on foreign direct investment (FDI) restrictions, which prevent it from selling goods directly to consumers. Currently, it only operates as a marketplace for third party sellers in India.