Ola And Snapdeal Valuations Take A Beating: Face $555 Mn Markdown From SoftBank

Softbank Group Corp has reportedly marked down close to $555 Mn in two of its Indian investments, cab hailing firm Ola and ecommerce marketplace Snapdeal, as per its six monthly earnings report, ending September 2016.

Softbank on Monday announced second-quarter results posting a profit of $5.1 Bn, boosted by a favourable exchange rate, as well as by healthy operations in the Japanese home market. Around half the value of the reported mark-downs in its investment is due to the Japanese currency’s appreciation against others.

The company said, “Gain or loss arising from financial instruments at FVTPL comprises mainly changes in fair value of preferred stock investment including embedded derivatives, such as ANI Technologies Pvt. Ltd and Jasper Infotech Private Limited in India, designated as financial assets at FVTPL.”

The company stated a loss of $557 Mn from financial instruments for the six-month period ending 30 September 2016 compared to a gain of $1 Bn in the year-ago period.

This announcement comes at a time when earlier last month, it was reported that Ola is reportedly in talks with SoftBank to raise up to $500 Mn in a fresh round of funding to compete with its nemesis Uber. Earlier in June 2016, reports had surfaced that Ola was in talks with its existing and new investors to raise $300-400 Mn this year. In August 2016, it was revealed that US-based investment firm Vanguard invested $50 Mn in Ola in December 2015, taking Ola’s valuation to $4.2 Bn.

At that time it was reported that SoftBank has a $750 Mn in Singapore-based online taxi-hailing platform Grab. If the deal with Ola would have fallen into place, it was speculated to be the largest deal by SoftBank in India.

On the other hand, in February this year, Snapdeal 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 new round valued 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.

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

The development was reported by LiveMint.