SoftBank makes $1.3 B profit on Walmart-Flipkart deal; records capital gain tax of $573 M

Japanese internet conglomerate SoftBank, which held about 20 percent stake in Flipkart, had invested in the Indian e-commerce giant through its Vision Fund and its Delta Fund, last year.

SoftBank Vision Fund, the $93 billion private equity fund that bets on tech companies worldwide, realised a gain of Rs 9,457.8 crore (¥146,682 million) when it sold its stake in Flipkart Private Limited, the company revealed in its quarterly earnings result briefing.

It also disclosed it recorded a capital gain tax Rs 4,184 crore (¥64,892 million) for the share transfer deal that concluded in August this year.

In a statement, SoftBank said, “Capital gains on investments in entities that operate businesses in India are subject to tax in India. Consequently, current taxes of ¥64,892 million were recorded for the aforementioned realised gain in Flipkart, which mainly operates businesses in India. The sale of Flipkart shares occurred within 24 months of making the investment, and therefore was taxed at 43.68 percent, the Indian short-term capital gains tax rate.”

SoftBank, which held about 20 percent stake in Flipkart, had invested in the Indian ecommerce giant through its Vision Fund and Delta Fund last year. The sale of its stake in Flipkart is also the first monetisation of investments made by the Vision Fund since its inception.

While reporting its June earnings, SoftBank had said it had reclassified Flipkart shares with a fair value of Rs 28,353 crore (¥439.8 billion) as assets classified as 'held for sale' following the agreement on the sale to Walmart. The actual share sale though took place in August, and total proceeds from the share sale were around Rs 27,204 crore (¥421.9 billion).

Similarly, the company stated that a deferred tax of Rs 4,625 crore (¥71,746 million) was recorded for Flipkart share sale transaction. In its second-quarter earnings briefing, SoftBank disclosed it recorded a capital gain tax Rs 4,184 (¥64,892 million) for the same transaction.

The company added that it also made an “unrealised gain on valuation of ¥503,769 million recorded due to an increase in the fair values of NVIDIA Corporation (“NVIDIA”), Oravel Stays Private Limited (“OYO”) and other investments.”