Local businesses, HNIs pile into bourse-bound Snapdeal, as Alibaba exits the firm

Domestic businesses and high net worth individuals have invested in Snapdeal ahead of its initial public offering, buying out Chinese giant Alibaba from the New Delhi-based ecommerce firm amid heightened scrutiny of bets originating from the east Asian country.

Promoters of Havells India and Asian Paints such as QRG Investments, Rupen Investment and Centaurus Trading have invested in Snapdeal, as per the draft documents filed for the Rs 1,250 crore IPO. 

Chinese ecommerce entity Alibaba sold 4.4% stake in the round that saw participation of individuals including Borosil managing director Priyanka Shreevar Kheruka, Edelweiss Mutual Fund MD Radhika Gupta, and former Snapdeal executive Jason Kothari.

Moneycontrol was the first to report that an investor was looking for an exit ahead of the IPO.

Snapdeal founders Kunal Bahl and Rohit Bansal marginally increased their stake in the Indian ecommerce company through the round.

Snapdeal and Alibaba did not respond to queries till press time.

The development comes after India subjected Chinese investments to extra scrutiny last year after their soldiers clashed on the border and New Delhi worried about investors from the neighbour doing opportunistic takeovers during the pandemic.

According to people in the know, Chinese investors are exiting fearing scrutiny of a single bet may have repercussions for their shareholdings in other companies as well.

SoftBank Group's Starfish I Pte will sell a part of its 35.41% stake in the ecommerce firm during the IPO. Others will also sell shares in the offering including Foxconn, Sequoia Capital and Ontario Teachers’ Pension Plan Board. 

Collectively, this amounts to around eight percent of the company’s pre-offer equity share capital.

Earlier this month, Snapdeal sold 30% of subsidiary Unicommerce to SoftBank. 

Unicommerce is Snapdeal’s software as a service (SaaS) platform for inventory, order and warehouse management, as well as automation.

Snapdeal filed draft documents for its IPO on December 21.

As per the papers, the firm’s net merchandise value has grown 82 percent over the last two quarters from Rs 205 crore in the fourth quarter of FY21 to Rs 374 crore in the second quarter of FY22.