From Alibaba To Aditya Birla – Biggies Line Up To Buy Jabong’s Sinking Ship

Rocket Internet backed fashion ecommerce company, Jabong has fastened up its sale process according to sources close to the development.

Currently, Aditya Birla Group’s ecommerce portal Abof , Chinese ecommerce giant Alibaba, and Future Group are speculated to be the frontrunners. However, negotiations are also being reportedly carried out with Myntra and Snapdeal as well.

As per Mint, the talks are led by Kinnevik chief executive Lorenzo Grabau. He was in India last week to meet executives of Snapdeal, Abof, Future Group and Myntra.

Kinnevik is the largest shareholder in Jabong’s parent company GFG and is negotiating with buyers on behalf of Rocket Internet, which owns more than 21% of GFG. Kinnevik is reportedly seeking a valuation of $100-150 Mn for Jabong in cash and stock. However the deal is expected to close at a much lower valuation of $50-60 Mn.

Jabong has been a bone of contention for Rocket Internet for a long time now. After its launch in 2012, Jabong has eaten up most of the cash in discounts, marketing and inventory to scale up.

In September 2014 Jabong was merged with four of its fashion brands to form one single business. The combined entity will have valuation of $3.5 Bn. Dafiti (Latin America), Jabong (India), Lamoda (Russia and CIS), Namshi (Middle East) and Zalora (Southeast Asia and Australia), to be known as GFG i.e. Global Fashion Group.

In September 2015, Jabong’s CEO and co-founder, Arun Chandra Mohan stepped down from his position. This took the toll to Jabong’s five founders who either left or were replaced in a management churn. Right after the exit the talks to sell Jabong to Paytm fell apart in September 2015.

As per sources close to Inc42, Jabong’s CEO Sanjeev Mohanty is also planning to step down from his position. Mohanty, who was former Benetton India managing director came on board in November 2015.

In October-December 2015, Jabong’s gross merchandise value (GMV) dropped by one-fifth to INR 377.3 Cr (approx $57 Mn). Till date a total of $240 Mn has been invested in the company.

Earlier this year in March reports surfaced that parent Global Fashion Group (GFG) infused an additional $20 Mn into Jabong, to keep it afloat for one more year, while carrying out negotiations for sale with other parties.

The portal has not been able to generate profits owing to increasing net losses. However, the major concern is not losses but the fast depletion of cash resource. On the other hand Jabong’s competitors Amazon India, Flipkart and Snapdeal are drawing billions from overseas investors.