It seems that Kunal Bahl, co-founder and chief executive officer of Snapdeal — that sold off its mobile payments arm Freecharge in a Rs 385 crore deal to private lender Axis Bank — is in no mood to succumb to pressure from the investors to sell his company to rival Flipkart.
"Every new beginning comes from some other beginning's end. Freecharge has been a tremendously enriching experience for us. And now it is time for us to focus our energy and passion on continuing the Snapdeal journey ... onwards and upwards for Snapdeal," Bahl said in an email sent to the employees on Thursday evening.
While Snapdeal investors have been pushing hard for sale of the company to rival Flipkart, following excessive competition from US-headquartered Amazon and the domestic rival, Snapdeal's co-founders seem adamant on sustaining the company — either on a standalone basis or going ahead with a strategic deal with listed e-commerce firm Infibeam.
"With massive revolution happening in our country...with affordable smartphones, a unified GST tax regime, and rising income levels, there is no better time to be in this (e-commerce) business. We have the opportunity of a lifetime and we must seize it," Bahl further said.
Depleting cash reserves had dragged the company to a vulnerable position in last few months. To make things worse, the term sheet issued by Flipkart detailing buyout conditions is filled with clauses and hold backs imposing legal liability on board members post the deal.
Following resistance from the founders on term sheet clauses, the company's board had on Wednesday decided to let all the two dozen-odd stakeholders take a call on whether to accept the offer or not, Moneycontrol reported this week.
However, with some fresh money coming into the bank, the co-founders' confidence seem to have hit a new high.
"For Snapdeal, this is also a great outcome as it provides us the necessary boost in resources to continue our journey towards building e-commerce platform that enables sellers across India to reach consumers in every corner of the country," Bahl said in the e-mail to the company's 1,200-odd employees.
Axis Bank announced the acquisition of Freecharge on Thursday and plans to retain it as an independent entity. The private lender has also agreed to retain the entire Freecharge team of around 200-250 employees.
According to multiple sources, the company had a marginally better valuation offered by rival Amazon for Freecharge. However, Axis was chosen over Amazon citing better synergy.
In a separate email to employees, Jason Kothari, who spearheaded the deal confirmed that while Freecharge had multiple suitors, it chose Axis for it was the right "home for the brand".
Bidding farewell to the Freecharge employees, Kothari said he was confident that the "Freecharge family will continue to grow, prosper and do amazing things, only on an even bigger canvas."
Axis Bank has huge plans for the digital payments space and targets to make "appropriate investments" in Freecharge to ensure a strong growth, Jairam Sridharan, chief financial officer of Axis Bank told Moneycontrol
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