SoftBank initiates truce between Snapdeal’s investors paving way for sale to Flipkart

By : |April 5, 2017 0

Looks like Snapdeal may finally find a shore for itself soon as its three biggest investors—SoftBank Group Corp., Kalaari Capital and Nexus Venture Partners have decided to bury the hatchet, making way for a proposed sale of the e-tailer to one of its biggest rivals, Flipkart or Paytm, reports Livemint.

Citing people in the know of things, the report says that SoftBank held boardroom discussions proposing to buy a part of the stake owned by Kalaari and Nexus. Reportedly, both these early investors asked for about $100 million each from the sale. Furthermore, the proposed sale could see SoftBank pick up a 20 percent stake in India’s largest commerce company for about $1.5 billion, in the process buying out $500 million to $1 billion worth of Tiger Global’s holding in Flipkart.

According to the report, all stakeholders are willing to reach an agreement because “cash is running out” at Snapdeal. “But a compromise will be reached only if the deal makes financial sense for everyone,” a source added.

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Notably, Alibaba-backed Paytm had also discussed a potential acquisition of Snapdeal, but the valuation offered by it was much lower than Flipkart, added another source.

The two co-founders- Kunal Bahl and Rohit Bansal who together own about 6.5 percent of the company have also asked SoftBank for a $100 million payout to them and their management team in order to clear the way for a sale.

Snapdeal was valued at $6.5 billion in its last funding round in February 2016 but its value in a potential deal will be a fraction of that, the sources said.

Despite a rebranding and makeover, Snapdeal reported a loss of $14.93 million in the financial year to March 31, 2016, according to regulatory filings. Also, in February, it laid off 600 employees, and its founders gave up their salaries in a bid to conserve valuable cash.

 

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