Axis Bank holds back Rs 80 crore in FreeCharge payout to Snapdeal

Priyanka Sahay
Moneycontrol News 

Private lender Axis Bank has held back an amount of around Rs 80 crore even as it completes the acquisition of Snapdeal's payments arm Freecharge in an all-cash deal, due to pending regulatory approvals, according to multiple people privy to the development.

According to experts, it is not very common for a buyer to hold back an amount after a deal is announced. However, it also cannot be completely ruled out because such deals are announced with conditions subject to approval.
"The RBI has given the matter a hearing which will happen in about a week," said one of the person quoted above adding that the amount might be paid if RBI is convinced of the issue.

There wasn't a broader clarity on the reason behind the pending regulatory approval immediately.

Snapdeal and Axis both confirmed that some amount has been held back, however, did not elaborate further.

"The holdback is customary for completion of certain items in a deal of this nature," both Jasper and Axis spokespersons said in separate emails.

The board of Axis Bank entered into a share purchase agreement with Jaspers Infotech Private Limited which runs Snapdeal to buy 100 percent stake in its payments subsidiary Freecharge in an all-cash deal worth Rs 385 crore in July.

On October 6th, Axis announced in a regulatory filing that the bank had completed the acquisition of Freecharge for a cash consideration of Rs 373.27 crore.

On the issue of difference of about Rs 12 crore, Axis Bank said, "The difference in announced value and executed value is due to business-related adjustments, as is standard practice for such transactions.”

The bank, however, did not give an immediate clarification if the hold back amount was over and above this difference or including this.

The cash from the Freecharge acquisition will provide Snapdeal with the much-needed breather that is running the show single-handedly after declining to be acquired by rival Flipkart, a couple of months ago.

Snapdeal had acquired Freecharge in 2015 for about USD 400 million.