After the sale, SoftBank is likely to get a 20% stake in the merged entity
Japan’s SoftBank, the largest investor in Jasper Infotech-owned e-commerce platform Snapdeal, is understood to have have initiated the process of sale to Flipkart. Sources said that SoftBank has reached an arrangement with the other two key investors in Snapdeal — Kalaari Capital and Nexus Venture Partners — regarding the modalities of the sale.
“Kalaari Capital which owns 8% in the company is expected to gain around $70-100 million for selling their shares to SoftBank. Similarly, Nexus Venture Partners which holds about 11% is expected to earn $100 million from sale of its shares,” sources said. SoftBank holds a 33% stake in Snapdeal.
The three investors — SoftBank, Kalaari Capital, Nexus Venture Partners — and Snapdeal didn’t respond to e-mails sent by FE till the time of going to press. After sale to Flipkart, SoftBank is likely to get a 20% stake in the merged entity. As reported earlier, the sale would be through a share swap ratio of 1:10 in favour of Flipkart. SoftBank would get 10% through the share swap and will buy the remaining 10% from Tiger Global, which holds 35% in Flipkart, for around $1.5 billion.
Last week, Flipkart raised a total of $1.4 billion from Tencent, eBay and Microsoft. Post the transaction, Flipkart is valued at $11.6 billion. Meanwhile, Snapdeal is understood to have offered retention package to three of its top management employees – Jason Kothari, chief strategy and investment officer, Snapdeal, and CEO, FreeCharge; Anup Vikal, CFO; and Rajiv Mangal, CTO. The three are expected to receive a retention package of $2 million each.
Earlier this month, following months of negotiations, SoftBank was believed to have initiated the sale of the business to Flipkart by offering Snapdeal founders Kunal Bahl and Rohit Bansal $50 million in lieu of their stake. Sources said Kunal Bahl and Rohit Bansal, who together own 6.5% equity in Snapdeal, are expected to receive $25 million each from sale of their shares.