Snapdeal Raises $200 Mn From Ontario Teachers’ Pension Plan, Iron Pillar & Others

Delhi-based ecommerce marketplace, Snapdeal, has raised about $200 Mn in a funding round led by Canada-based pension fund – Ontario Teachers’ Pension Plan, Venture capital fund – Iron Pillar and Singapore-based investment entity – Brother Fortune Apparel. The deal is a mix of primary and secondary components.

The round also saw participation from Bennett Coleman & Co.

Ontario Teachers’ is Canada’s largest single-profession pension plan with $154.5 Bn in net assets. Iron Pillar is a venture capital fund focused on filling the gap for mid stage technology investments in India.

The new round values the company somewhere between $6.5-$7 Bn. Snapdeal was valued at $5 Bn during its last round in August 2015, in which it had raised $500 Mn from Alibaba Group, Foxconn Technology Group and Softbank.

Its closest competitor Flipkart is currently valued at about $15 Bn.

Brother Fortune Apparel Pte Ld has invested about $50 Mn (INR 335 Cr.), against which, Jasper Infotech (Parent company of Snapdeal) has issued 20,205 Series J compulsorily convertible cumulative participating preference shares. Bennett has been issued 15,638 warrants estimated at $3.6 Mn (INR 25.49 Cr.).

Before this round, the company had also raised a round led by Alibaba in November. According to the documents filed with the Registrar of Companies, Alibaba had invested $146 Mn (INR 995 Cr.) against which Snapdeal had issued 79,113 Series I compulsorily convertible cumulative participating preference shares to Alibaba.

The reports of Canada-based Ontario Teachers’ Pension Plan looking to invest in Snapdeal had sufficed in media in September last year.

“We see these investments as a continuing endorsement of Snapdeal’s strategy to build India’s most reliable and frictionless commerce ecosystem. We continue to make targeted investments in building internal and external capabilities that will enable us to consistently deliver optimal experience for the millions of buyers and sellers who transact daily on Snapdeal” said Anup Vikal, chief financial officer, Snapdeal.

Snapdeal has more than 275,000 sellers, 30 Mn products on its platform and a reach covering 6000+ towns and cities across India. The funds raised in this round will be used to build its technology platform, logistics, payments and back-end infrastructure, according to a company spokesperson.

The Ecommerce War Zone

Recently, ecommerce giant Amazon has infused over $300 Mn (INR 1,980 Cr.) in Amazon Seller Services to boost its operations in India. The latest infusion comes right after Amazon infused $250 Mn (INR 1,696 Cr) through a rights issue into the Indian unit in late December last year. The funds are being used to extensively improve warehousing, logistics and marketing services.

Adding on, there were reports that Flipkart is currently in talks with Snapdeal’s investor Alibaba for a potential investment. Although the talks are at a nascent stage, but will completely change the current competitive scenario of the ecommerce in India. Alibaba is also an investor in Paytm.

Flipkart and Snapdeal reported loss of about INR 2,000 Cr and INR 1328 Cr, respectively, in the fiscal year ending March 2015.

Hyperlocal Push

The ecommerce biggies have increased their focus in the hyperlocal services and delivery segment in the recent times.

Amazon started offering hyperlocal grocery delivery service called Amazon Now in 74 pin codes in Bangalore in February, 2015. Prior to this, it had launched Kirana Now which leverages neighbourhood or kirana stores with the aim of quickly delivering everyday-need consumer products.

Flipkart had launched its grocery delivery app Flipkart Nearby in October last year, and also f Qck to enable delivery of orders within hours. Whereas Snapdeal invested in online grocer ‘PepperTap’ to explore the space further.

As far as hyperlocal services are concerned, Snapdeal has recently started pilot of its hyperlocal services category in four cities – Delhi, Gurgaon, Mumbai and Pune. The company is also in talks of acquiring 10% stake in Hyperlocal services startup Zimmber. On the other side, Amazon invested about $22.5 Mn in Bangalore-based Housejoy and Paytm acquired hyperlocal services marketplace Near.in.

Fulfilment Centres & Logistics

Flipkart is currently equipped with 17 fulfilment centres (FC) and has a total warehouse space of up to 1.6 Mn sq ft. Last year, Flipkart had set up its largest fulfilment centre at Gundla Pochampally, on the outskirts of Hyderabad. The company further plans to add 50-100 warehouses over the next four to five years. On the other side, Amazon currently has over 21 FCs across 10 states with a total of over 2 Mn-sq-ft of space. It added 13 new FCs in 2015 alone.

Whereas Snapdeal had over 50 fulfilment centres across 20 cities as of March 2015. The company was targeting 75 such centres across 30 cities to launch its FCs.

Snapdeal had also invested $20 Mn (INR 131 crore) in logistics and delivery services venture GoJavas last year in October. GoJavas has more than 100,000 square feet warehouses under its management.

Just recently, Flipkart too infused about $98.4 Mn (INR 666 Cr) in its logistics arm – eKart,

Acquisitions

In 2015 alone, Snapdeal has acquired 7 startups including Smartprix, Exclusively.in, Unicommerce.com, RupeePower, MartMobi, FreeCharge.com and Reduce Data. Flipkart acquired Appiterate, FX Mart. 

Between 2009 and 2013, the Indian ecommerce industry grew at a CAGR of 37.2% and reached $14.9 Bn from $4.2 Bn. By 2020, India’s Internet market is expected to grow to $137 Bn from $11 Bn in 2013, according to Morgan Stanley.

India’s booming ecommerce segments has attracted interest if both local and international investors in past two years. In 2015 alone, more than $3.6 Bn was invested in the Indian ecommerce companies that are fighting to add more and more funds into their kitty to grab the larger pie of the Indian online consumers. Apart from online marketplaces, players in the niche segments, such as UrbanLadder in furnishing space, Bluestone in Jewellery etc. have also attracted funding.

Snapdeal’s other investors include BlackRock, Foxconn, eBay, Temasek, Premji Invest, Intel Capital, Bessemer Venture Partners, Ratan Tata, among others.