JOIN USSnapdeal’s largest investor SoftBank is moving ahead with its plan to persuade existing investors Kalaari Capital and Nexus Venture to sell their stake and expedite its possible merger with ecommerce firm Flikpart.
Softbank, the Tokyo-based investment major, holds the largest stake in Snapdeal holding company Jasper Infotech with an ownership of 33% stake. Other two major investors include Kalaari Capital and Nexus Venture Partners with 8% and 10%, respectively.
In a recent meeting, SoftBank showed interest in buying the stake of early investors Kalaari Capital and Nexus Venture. But the two investors are fighting for the valuation. Snapdeal was valued at $6.5 billion in its last funding round in February 2016, and since then the valuation came down.
SoftBank strengthened its position on the board of the country’s third largest online marketplace by appointing Lydia Bly Jett as additional director. This was preceded by the appointment of Kabir Misra in March last year. Besides co-founders Kunal Bahl and Rohit Bansal, Snapdeal’s seven-member board includes representation from investors SoftBank, Kalaari Capital and Nexus Venture Partners.
According to sources working with Japanese research agency, the talks are going ahead in the right direction so that Snapdeal merger with Flipkart will be materialised.
“Both Snapdeal and Flipkart are bleeding and have failed to raise the next round of funding. Now to take on the competition from Amazon, which has a long-term investment strategy for India business, merger of Snapdeal and Flipkart is an ideal solution,” sources told DH.
They pointed out that Flipkart is on its way to restructure business game plan. “The newly appointed CEO of Flipkart is facing the heat of competition and the merger will pave the way for rationalisation of their business,” they said.
The proposed sale could see SoftBank pick up a 20% stake in Flipkart for about $1.5 billion, in the process buying out $500 million to $1 billion worth of Tiger Global’s holding in Flipkart. From the end of 2015, Snapdeal slipped to a distant number three in the market and doubled its loss to Rs 3,316 core in March 2016, even as revenue rose 56% to Rs 1,457 crore.