Softbank-backed Snapdeal is all set to file a draft red herring prospectus (DRHP) to raise Rs 1,250 crore in fresh issue through an initial public offering (IPO) on December 20, according to sources privy to the development.
The draft documents which broadly outline a company’s reasons to raise money, use of funds and risks is ready and would be filed with the Securities and Exchange Board of India (SEBI) during the late evening. In the unlikely circumstances it may get delayed by a day.
The IPO will see Softbank, Snapdeal’s lead investor, reduce its shareholding from 34 percent to 24 percent.
Moneycontrol was the first to report that one of Snapdeal’s investors was looking for a partial exit to fetch around $50 million.
The company has appointed Bank of America, besides Axis Bank and JM Financial, for the public listing.
Last week, in a blog, Kunal Bahl, founder of Snapdeal said that the company happens to be a brand that is not in the urban sub-consciousness.
According to him, 70 percent of Snapdeal customers are from tier 2 towns, looking to buy affordable products with value for money.
"Majority of our customers have a household income of up to Rs. 40,000 per month. They mostly live in Tier 2 cities and beyond. Most of them commute using public transport or a two-wheeler. Their aspirations are no longer limited by how much they earn," he said.
Bahl was sharing his insights into what he felt was a key question among urban Indians: "But, who buys from Snapdeal?"
Earlier this month, Moneycontrol had reported that Snapdeal was all set to venture into the offline domain with the launch of partner stores across small cities of the country with an aim to attract and cater to ‘Bharat’.
The first Snapdeal partner store will be launched in January next year. The company plans to gradually expand the number to around 25 by the end of 2022.
Ahead of the IPO, Unicommerce, its fully owned subsidiary, has also raised investment from Softbank for around 30 percent stake, Moneycontrol reported last week. sources privy to the development had said.
In 2017, Snapdeal explored a much talked about merger with larger rival Flipkart. However, after a lot of back and forth it decided to go solo following a disagreement over the valuation offered on the table terminating all talks for a distress sale.
The bullishness came from the fact that it had managed to sell off its payments unit Freecharge to private lender Axis Bank for Rs 385 crore just a few days ago. It soon also sold off logistics service provider Vulcan Express Pvt Ltd in an all-cash deal valued at Rs 35 crore to Kishore Biyani's Future Supply Chain Solutions.
The two deals gave Snapdeal a much-needed cash breather for survival. Following this, it revamped its model to become a marketplace for value-conscious buyers along the lines of what one would get in the offline bazaars in India.
Snapdeal did not respond to a media query.
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