Snapdeal to strike a sales deal with rivals Paytm & Flipkart? Here’s the truth

Snapdeal has managed to make headlines once again. This time, it is alleged that marketplace is up for sale. Financial problems seem to be the case at Snapdeal. The online retail giant recently went into cash conservation mode and laid off a huge chunk of employees. It hiked seller charges and devalued itself to raise capital. Sellers complained about payment overdue from the ecommerce company and Axis Bank demanded that Snapdeal sellers repay their loans immediately.

Reported talks for a sale

According to three sources, Snapdeal was in talks with its ecommerce rivals, Flipkart and Paytm for the sale of its ecommerce business. The sale value is less than the total equity raised by its parent company, Jasper Infotech Pvt. Ltd., claim the three sources aware of this development.

Two of them say that the platform has been priced at $1.5 billion to $1.8 billion. The Gurgaon-based business reached a valuation of $ 6.5 billion in 2016.

The three also state that SoftBank a major Snapdeal investor is leading the sale talks. It poured $900 million into the firm out of the approximate $2 million raised by Snapdeal. As this is just the initial stage of the talks with other ecommerce companies, SoftBank is likely to invest some more money, say around $50 milllion, in Snapdeal. This is until the deal is made.

It is rumoured that the Snapdeal is looking to sell off Freecharge, its mobile wallet company. It may also give up its 49% stake in the logistics company GoJavas.

Snapdeal more likely to sell to Paytm

Talks with Paytm appear to be more advanced than those with Flipkart. In fact, a team from Alibaba has visited Paytm (in which it has a stake) to discuss this deal.

The two ecommerce firsm are linked by investors. SoftBank has a 35% stake in Snapdeal, making it its largest investor. Other major investors include Alibaba Group, Kalaari Capital and Nexus Capital. For Paytm, Alibaba is a major investor and SoftBank is one of its top investors.

Snapdeal denies company sales

Snapdeal’s spokesperson denies any talks about the sale of the company to its ecommerce rivals.

The spokesperson says, Snapdeal categorically denies having had any such discussion. The information is incorrect and without basis.”

“We are making decisive progress in our journey towards profitability and all our efforts are aligned in this direction,” the spokesperson also mentions.

Snapdeal’s losses recently grew by 125%. Its general merchandise sales are soaring, but it is keeping its purse strings tied. The etailer plans on turning profitable in the next two years but that could be difficult claim experts.

According to a report, Snapdeal has about Rs.1,100 – 1,200 crore left as cash reserves, which makes it vital for the company to secure funding soon.

Flipkart recently secured $1 billion in funding and Paytm scored big with Alibaba’s increased stake in the company.

If Snapdeal does decide to sell its business to Flipkart or Paytm, it will be the largest acquisition in the history of Indian ecommerce and start-up businesses in the country. Industry experts believe there is enough space for only two top players in Indian online retail and depending on Snapdeal’s plans it may or may not be in the top two.

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