In a bid to compete with Paytm, a mobile payment and commerce platform, Snapdeal is trying to raise funds for Freecharge at an undisclosed valuation. Snapdeal had acquired Freecharge in April last year for $400 Mn in a cash and stock deal.
The company is reportedly looking to raise about $300 Mn for Freecharge.
As said, Chinese firms and sovereign funds are showing investment interests to gain outsized returns.
“I have told investors, ‘If you want to come into our crown jewel, it is going to be at a price’,” said Kunal Bahl, CEO, Snapdeal. “If you are not willing to pay that price today, no problem. Let’s wait for three to six months and let (Free-Charge) continue to execute. Till then, we will finance it.”
Alibaba, a Chinese ecommerce company is already working with this model and earning revenues in billions with its recharge business Tmall. “They have seen that Alipay has been successful because it is attached to a large commerce platform,” said Bahl. Alipay, a third party online payment platform, was launched by Alibaba in 2004 and it currently has 450 Mn active users. It raised $4.5 Bn in April and is planning for an IPO soon.
The founders believe that this strategy would clearly differentiate them and would give an edge over the rivals Flipkart and Amazon.