While an initial public offering would be a distant option for Snapdeal right now, the company told Moneycontrol in an email response that "the new structure is optimised to enable pursuit of long term value creation for all shareholders"
A year after calling off its much talked about merger deal with rival Flipkart, Snapdeal has converted the preference shares of all its stakeholders, including SoftBank and Nexus Venture Partners, into equity shares, according to documents filed with the Registrar of Companies (ROC).
Conventionally, simplification of a cap table is seen as a preparation of a public listing where a simple cap structure is favoured by the market.
It may also attract new investors if the company wants to take the private route.
While an initial public offering (IPO) would be a distant option for Snapdeal right now, the company told Moneycontrol in an email response that "the new structure is optimised to enable pursuit of long term value creation for all shareholders".
The support of the board and major shareholders might indicate that harmony is on its way back at the board after the bickering seen last year.
Snapdeal was criticised by one of its oldest investors Kalaari Capital after calling off the deal with Flipkart in July last year.
Kalaari, which had about 8 percent share in the company, eventually sold off its stake to the promoters. It is learnt that the stake sale happened for about Rs 40 crore.
"We welcome and support this simplified, growth-oriented capital structure for Snapdeal, that aligns the interests of employees, shareholders and the broader Snapdeal community. This step will foster further innovation to best serve our loyal customers," said a spokesperson of Nexus Venture Partners in an email response.
As a result of this conversion, the company now has a single class of shareholding and all shares of the company has the same economic value. This move will also benefit the executives with employee stock options (ESOPs) whose shares will have the same value as compared to the biggest shareholder on the board, in this case SoftBank.
"We are happy to support the creation of a capital structure at Snapdeal, that is aligned with the growth objectives of the company and also rewards the team that is building the business," a SoftBank spokesperson said in an email response.
After it rejected Flipkart's offer, the company sold off its non core assets including Freecharge, Vulcan and Unicommerce.
While the Freecharge sale to Axis Bank fetched the company around Rs 385 crore, it got another Rs 35 crore form the sale of Vulcan Express to Kishore Biyani’s Future Supply Chain Solutions.
In May, BSE-listed Infibeam agreed to acquire Unicommerce for Rs 120 crore.The company is currently focussing on the sale of high margin categories such as home decor, general merchandise and apparel among other things and is learnt to have reduced its cash burn heavily as compared to the last couple of years.