SoftBank may lead $100 mn funding round in Snapdeal: Report

SoftBank may lead $100 mn funding round in Snapdeal: Report
Photo Credit: Photo Credit: Reuters
21 Aug, 2019

Japanese conglomerate SoftBank Group is in discussions with Gurgaon-based Snapdeal to lead a $100 million investment round in the Indian e-commerce marketplace, financial news website Moneycontrol reported.

SoftBank will contribute up to $60 million in the round while the remaining will be raised from investors from China and the US, the report said.

Snapdeal has raised close to $1.8 billion from multiple investors, including SoftBank. At the peak, its valuation was close to $6.5 billion in 2016. The company was valued close to $1 billion during its merger talks with Flipkart in 2017 that fell through.

SoftBank went on to invest about $2.5 billion in Flipkart in August 2017. Flipkart was later acquired by US-based retail giant Walmart for $16 billion.

In May 2017, SoftBank wrote off $1.4 billion on its two biggest investments in India—Snapdeal and cab-hailing app Ola.

SoftBank holds a significant minority stake in Snapdeal. It had led a $627 million round in the company in late 2014, followed by another round of $500 million in 2015.

Post the failed merger with Flipkart, the Gurgaon-based company adopted what it called a Snapdeal 2.0 strategy in a bid to revive its fortunes. It laid off a chunk of its workforce, and divested assets — FreeCharge to Axis Bank and logistics arm Vulcan Express. 

Jasper Infotech, which owns Snapdeal, bought out early investors Kalaari Capital and Bessemer Venture Partners in 2018, brought down SoftBank’s representation on the board from two to one seat and converted all shares into equity in a capital restructuring move.

The company recently reported a 73% growth in consolidated revenue at Rs 925.3 crore for the financial year 2018-19 compared to Rs 535.9 crore in 2017-18. The company also managed to cut losses by 71% to Rs 186 crore.

It also raised an undisclosed amount from Anand Piramal, executive director of Piramal Group, last month.

The marketplace claims that 80% of its buyers come from tier-2 cities and beyond. The company has a base of 500,000 sellers with over 200 million listings on the platform.