E-retailer Snapdeal’s founders Kunal Bahl and Rohit Bansal sold 11,462 shares in the firm to Ontario Teachers’ Pension Plan, raising R160 crore in a transaction in late 2015, filings with the Registrar of Companies (RoC) show.
Snapdeal was valued then at an estimated $6.5 billion. The founders in their personal capacity sold 5,731 shares each, where value of each share stood at R1.40 lakh, picking up R80 crore each.
A few of the other investors too sold shares at the time. In an email response to FE, a Snapdeal spokesperson said: “Changes in promoter shareholding are a matter of public record.” Canada-based fund Ontario Teachers’ Pension Plan declined to comment on its investment in an email response.
Losses of Jasper Infotech — the holding company in which Snapdeal is housed — ballooned to R3,315 crore in 2015-16, while revenues came in at R1,506.8 crore, data from RoC showed. In the previous year the company had posted a loss of R1,328 crore on the back of revenues of R933 crore.
The Jasper Infotech run e-commerce venture is now in the market to raise funds, though persons familiar with the development say the valuation would be way below that in December 2015, at closer to $4 billion.
In February, Japan’s SoftBank Group announced it had posted a loss of $350-million on its investments in Ola Cabs and Snapdeal, for the nine-month period ending December 31, 2016.“A stake sale in companies is not new. However, it is interesting the founders of Snapdeal decided to encash some of their shares even before the business had stabilised. In this context, their recent decision to forgo their salaries in the wake of the large rationalisation of manpower appears to be rather inconsequential,” a leading investor in several e-commerce ventures observed.
In February, in an email to employees, Kunal Bahl, co-founder and CEO, Snadpeal, said both the founders would take a 100% cut in salaries; last year Bahl and Bansal took home R40 crore each.
The money from the stake sale appears to have been used to invest in other start-ups. Between 2011-2016, Bahl invested in as many as 24 start-ups including Ola, Jugnoo, UrbanClap, Razorpay, among others, according to data platform, Crunchbase.
Bahl and Bansal aren’t the only ones to have profited from the sale of stake. According to documents viewed by FE, Kalaari Capital which invested just $6 million earned a return on investment of 16.4 times. Similarly, eBay which invested $33 million in Snapdeal in 2014, made a quick partial exit a year later. eBay pocketed a return that was three times its investment of $100 million.
Another investor Bessemer Venture Partners earned more than a three-fold return on its investment when it sold some of its equity in early 2015. Also, Russia’s Leonid Boguslavsky co-owned investment firm Ru-Net Technology Partners made 10-fold return, thus collecting $20 million for the $2 million, it had invested. In total investors have earned about $350 million through the secondary sale of stakes.
Snapdeal has over a period of time laid off around 600 people across its e-commerce, logistics and payments operations. Top executives who have quit the firm, over time, include Govind Rajan, CEO, of FreeCharge.
The e-commerce firm has also reduced the size of operations of its logistics arm, Vulcan Express, by more than half. Vulcan currently handles 30% of Snapdeal’s orders and had about 15 warehouses and 100 delivery centres.