The Indian e-commerce nexus: Flipkart-Snapdeal merger on the cards

Japan’s SoftBank, and the largest shareholder in Indian e-commerce platform, Snapdeal, has secured a nod from co-investor Nexus Venture Partners (NVP) to sell the e-commerce firm to its rival Flipkart, according to PTI report. The bank had secured a go-ahead from the founders and another investor Kalaari last month. As per regulatory filings, SoftBank currently owns over 30% in Snapdeal, while Nexus has roughly a 10% stake and Kalaari holds 8% share in the firm. SoftBank yesterday said it suffered a loss of $1 billion on its investment in Snapdeal during 2016-17. The deal between Snapdeal and Flipkart, if completed, would mark the biggest acquisition in the Indian e-commerce space. PTI quoted different sources as saying that Snapdeal founders would get about $25 million each, while NVP could get close to $100 million and stake in the merged/new entity. Kalaari could get about $70-80 million. Snapdeal was valued at $6.5 billion in its last funding round in February 2016. The valuation, however, has shrunk since then and the potential deal could see Snapdeal being valued at about $1 billion, said market watchers. In another important development, reports of Paytm signing a non-exclusive term sheet to acquire Snapdeal-owned rival Freecharge, emerged today. Indian e-commerce companies have seen funding dry up over the last few months as investors are focusing extensively on profitability and rationalization of expenses. Read More: What’s ailing Flipkart and Snapdeal the flag-bearers of e-commerce in India The current Indian e-commerce industry size is estimated to be around $14.5 billion, and is expected to touch the $100 billion mark by 2020. Both Snapdeal and Flipkart have been reporting losses and the former has continuously been struggling to raise funds. Snapdeal posted a loss of INR 29.6 billion (2015-16); Flipkart revealed losses of INR 52.23 billion. Even Amazon reported a loss of INR 35.71 billion. Combined the loss reaches a mammoth figure of INR 117.54 billion.

Abhinav Mohapatra

An author who has a keen interest for the ‘off-beat’ <!--more-->An author who has a keen interest for the ‘off-beat’, he has covered and explored multiple facets of the marketing, advertising

Great! You've successfully subscribed.
Great! Next, complete checkout for full access.
Welcome back! You've successfully signed in.
Success! Your account is fully activated, you now have access to all content.