Domestic rivals, Paytm and Flipkart, are in talks to buy homegrown ecommerce biggie, Snapdeal, according to a recent report by Mint. The report further states that if this sale goes through it would value the company at less than the total equity raised by parent firm Jasper Infotech Pvt. Ltd.
However, the company denied any such developments. In an emailed response to Inc42, a Snapdeal spokesperson said, “Snapdeal categorically denies having had any such discussion. The information is incorrect and without basis. We are making decisive progress in our journey towards profitability and all our efforts are aligned in this direction.”
The company is also in talks with Softbank to raise $100 Mn-$150 Mn in funds, in tranches, which could cut down its valuation to under $3 Bn, when its current valuation is pegged at somewhere around $4 Bn, as per reports.
This is not the first time these reports have made their way into the media. Earlier, in December 2016, there were reports that Chinese ecommerce giant, Alibaba was in talks to buy Snapdeal. In the same month, the media reported that PayPal too was looking to buy a 25% stake in Snapdeal’s acquired FreeCharge, which was later dismissed by the firm.
Founded by Kunal Bahl along with Rohit Bansal in 2010, Snapdeal has, till date, raised about $1.76 Bn funding in 12 rounds. The most recent investment came in August 2016 from Luxembourg-based firm Clouse SA that invested $21 Mn. This was a part of the same round where Snapdeal raised $200 Mn funding in February 2016.
According to RoC filings, the Snapdeal co-founders together own less than 6.5% share in the company. According to a recent report, the founders had sold 11,462 shares in their personal capacity in 2015 to Ontario Teachers’ Pension Plan. The two sold 5,731 shares each, subsequently raising $24.4 Mn through the transaction.
In November 2016, Softbank Group Corp, which has the highest holding in Snapdeal (about 32%) marked down close to $555 Mn in two of its Indian investments, cab hailing firm Ola and Snapdeal, as per its six monthly earnings report, ending September 2016.
The ecommerce firm has been in the news for quite some time for bleeding losses and more. In February 2017, the company fired about 600 people from its workforce, in a cost-cutting exercise. In the same month, Snapdeal also stopped the incentive programme for customers that was previously launched through affiliates.
Later, its CEO Govind Rajan resigned and was replaced by Jason Kothari just yesterday as the CEO of FreeCharge. Additionally, the company plans to invest an additional $20 Mn in the digital payments platform.
A few days back a group of online sellers had requested commerce minister Nirmala Sitharaman to safeguard their money that Snapdeal owed them, in the form of outstanding dues. Later, the Union Minister of State, Commerce & Industry (I/C) intervened in the situation and stated that she will look into the matter and inquire into vendors’ complaints of default payments by Snapdeal.
While Snapdeal is fighting to raise funds, its competitor Flipkart has closed $1 Bn round at a valuation of $10 Bn from undisclosed investors just last week. Also, the firm is further planning to raise another $1 Bn by the end of 2017.