This Deal Marks Rocket Internet’s First Exit In India
Kishore Biyani led Future Group has acquired Rocket Internet-backed online furniture startup FabFurnish. This is Future Group’s first acquisition of an ecommerce company and first exit for Rocket Internet in India.
The financial details have been left undisclosed for now, however, as per reports, Future Group might pay anywhere between $2.25 Mn to $3 Mn (INR 15 Cr. to INR 20 Cr.) in all cash deal.
Future Group also owns a private label furniture and home furnishing brand called HomeTown, which has over 40 stores. After acquisition, Future Group will use FabFurnish’s platform to take HomeTown online as well as expand its presence pan India.
According to Biyani, HomeTown is expected to become a INR 800 Cr. to INR 1,000 Cr. business by the end of current financial year for Future Group.
Entire FabFurnish employees have been retained for now, and Future Group senior executive Mahesh Shah and chief executive of HomeTown will head the new entity.
The acquisition will also act as a barrier against IKEA for Future Group. (a Swedish furniture retailing giant, which is looking to enter India in 2017).
Kishore added that the newly combined entity will look at achieving EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of INR 40 Cr. to INR 50 Cr. in the current fiscal.
Despite being an early entrant in the segment, FabFurnish was not being able to take off well. Companies such as Pepperfry and Urban Ladder, that are funded by investors such as Goldman Sachs and Sequoia Capital posed immense competition for the company. Last year, Pepperfry raised $100 Mn in Series D funding round led by Goldman Sachs Group Inc. and Zodius Technology Fund, while Urban Ladder raised $50 Mn led by Sequoia Capital and TR Capital.
Gurgaon-based FabFurnish was started in 2011 as an online shopping destination for furniture and home ware with a diverse range of products, ideas to grace home and unmatched customer service.
In July 2015, FabFurnish co-founders Vikram Chopra and Mehul Agrawal had quit the company, and were replaced by senior directors Ashish Garg and Ankita Dabas. Both Chopra and Agrawal continued to be associated as advisers with the company.
Earlier in January, there were reports that FabFurnish investor Rocket Internet was looking to sell out some of its Indian investments (Jabong, FoodPanda). The company was also in advanced talks for merger with BedBathMore, an online home decor firm, to compete against rivals Urban Ladder and PepperFry.
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