A board meeting of the loss-making e-commerce firm Snapdeal on Tuesday failed to throw up a conclusive agreement between investors on the sale of the company, sources privy to the development said. While a proposal to sell the beleagured Snapdeal to rival Flipkart is believed to have been approved by one set of investors including Japan’s SoftBank and Kalaari Capital, another investor Nexus Venture Partners is understood to have changed its stance on selling out completely. While earlier it was contemplating a complete sale, sources said, it now wants to retain some part of its 11% stake.
The board of Flipkart is scheduled to meeton Friday. Emails sent to SoftBank, Kalaari Capital, Nexus Venture Partners and Snapdeal remained unanswered till the time of going to print. Kalaari Capital, which holds 8% of Snapdeal’s equity, it is understood, will receive an amount of around $70-80 million, from Softbank.
The two founders Kunal Bahl and Rohit Bansal, who together own a 6.5% equity in Snapdeal, are expected to receive $25 million each from Softbank, which holds a 33% stake in the business, for their stakes. It is believed that the sale of the e-commerce business will involve a share swap in the ratio of 1:10 in favour of Flipkart. In addition, Softbank might infuse additional capital into Flipkart, around $1.5 billion, so as to end up with an equity stake of 20%.
You might also want to see this:
SoftBank, sources said, was yet to find a buyer for Snapdeal’s payment wallet business Freecharge,although the business had been offered to PayPal, Paytm and MobiKwik. Should the Japan-based investor not succeed in finding a buyer for Freecharge, the latter might need to start paring the number of employees. Losses at Jasper Infotech — the holding company in which Snapdeal is housed — ballooned to Rs 3,315 crore in 2015-16, while revenues came in at Rs1,506.8 crore, RoC data showed. In the previous year the company had posted a loss of Rs 1,328 crore on revenues of Rs 933 crore.
Snapdeal is believed to be losing Rs 50 crore every month, although these numbers could not be independently verified by FE . According to the filings with the registrar of companies (RoC), Snapdeal had Rs 1,072.2 crore as cash and bank balances as on March 31, 2016.
In late 2015, Snapdeal’s founders Kunal Bahl and Rohit Bansal had together sold 11,462 shares in the firm to Ontario Teachers’ Pension Plan, for R160 crore, filings with the Registrar of Companies (RoC) show. Snapdeal was valued then at an estimated $6.5 billion. Bahl and Bansal aren’t the only ones to have profited from the sale of stake.