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Snapdeal inches closer to Flipkart sale with Kalaari Capital nod

Snapdeal’s largest stakeholder SoftBank, which has for long been trying to sell its portfolio company, was initially facing stiff resistance from other early investors such as Kalaari and Nexus Venture Partners.

April 24, 2017 / 02:32 PM IST
A private security gurad stands at a gate of Snapdeal headquarters in Gurugram on the outskirts of New Delhi, India, April 3, 2017. Picture taken April 3. REUTERS/Adnan Abidi - RTX33YCH

A private security gurad stands at a gate of Snapdeal headquarters in Gurugram on the outskirts of New Delhi, India, April 3, 2017. Picture taken April 3. REUTERS/Adnan Abidi - RTX33YCH

The multi-billion dollar e-commerce space may witness a dramatic shift going by the latest news that's doing the rounds. Kalaari Capital, one of the earliest investors in Snapdeal, has given the green light for the proposed sale to rival Flipkart.

Snapdeal’s largest stakeholder SoftBank, which has for long been trying to sell its portfolio company, was initially facing stiff resistance from other early investors such as Kalaari and Nexus Venture Partners. But Kalaari has finally agreed to a sale after weeks of talks. Snapdeal is valued at USD 1 billion, much lower than its peak of USD 6.5 billion a few years ago.

However, it remains unclear whether Snapdeal’s founders – Kunal Bahl and Rohit Bansal – have given the go-ahead for the sale. According to the shareholders agreement of the company, SoftBank requires agreement of at least two major shareholders of Jasper Infotech – the company that owns Snapdeal - to go ahead with the sale.

On the other hand, Flipkart – the largest online retailer in India – might also place a bid for digital payments platform FreeCharge. Owned by Snapdeal since 2015, FreeCharge commands a price between USD 40-75 million.

FreeCharge, once touted as the crown jewel of Snapdeal by none other than its Chief Executive Officer, Kunal Bahl, was commanding a valuation of USD 700-900 million as recently as last year. If the deal is finalised at its current valuation of USD 40-75 million, it will be a huge loss for Snapdeal which bought the company for USD 400-500 million in a cash-and-stock deal.

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The Snapdeal sale, if successful, will mark SoftBank’s foray into Flipkart. Flipkart, according to a two-step agreement, will receive a significant investment ranging between USD 1-1.5 billion from the Tokyo-headquartered investor post the merger.

Incidentally, Flipkart is not the only company which showed an interest in FreeCharge. Paytm, backed by Alibaba, has already shown interest in buying rival FreeCharge.

SoftBank has made sizeable investments in Indian startups, including online cab aggregator app Ola, hotel room aggregator Oyo and online grocery delivery service Grofer among others. The company is also reportedly looking to make a significant investment in One97 Communications – owner of Paytm.
first published: Apr 24, 2017 02:32 pm

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