After setting the stage for Snapdeal’s proposed sale to Flipkart, SoftBank is at it again. This time, the target is FreeCharge, the digital payment subsidiary of Snapdeal. Reportedly, Softbank has now proposed to sell FreeCharge, as a separate entity, for as low as $150 Mn to $200 Mn. This is a 50% markdown compared to the the $450 Mn that Snapdeal infused in the company in April 2015 during its acquisition.
For now, Alibaba-backed Paytm is said to be the frontrunner for acquiring FreeCharge.
As stated by an ETtech source, “A lot has changed with both Snapdeal and Freecharge in the last quarter. Paytm is interested in Freecharge but only if the math is reworked. It also wants exclusive rights along with the deal to become the sole payments platform for Flipkart and Snapdeal.”
As per other ET sources, Flipkart owned digital payments and UPI-enabled platform PhonePe is also looking for further funding from investors like Paypal.
Earlier, in December 2016, reports surfaced that Paypal had placed a bid to acquire 25% stake in FreeCharge, at $200 Mn valuation. However, FreeCharge refuted these reports and denied any such possibility.
To date, SoftBank has invested over $2 Bn in capital in Indian markets across consumer Internet startups. The Snapdeal-Flipkart buyout is an attempt to consolidate its position in the market. If the deal goes through, it will mean a 20% stake for SoftBank, for $1.5 Bn, while buying out $500 Mn to $1 Bn worth of Tiger Global’s holdings in Flipkart.