Snapdeal valued at $6.5 billion, new investors come on onboard
BENGALURU/MUMBAI: Online marketplace Snapdeal has closed a $200-million financing round, a majority of which is in the form of a secondary transaction, valuing the e-commerce firm at $6.5 billion. The new investors coming on board include Canada's Ontario Teachers' Pension Plan, which manages more than $150 billion in assets, and a newly floated mid-stage tech fund Iron Pillar, among others. A secondary sale is when an existing investor sells shares to a new one but the money does not come into the company's coffers.
Snapdeal's valuation stood at $4.8 billion post its $500million fund raise led by Foxconn Technology and Alibaba in August last year.
Besides the secondary transaction, around Rs 335 crore of fresh funds were infused into the Gurgaon-based online retailer via primary issuance of shares in what is Snapdeal's series J, or tenth, financing round.
Sources said investors like Saama Capital and eBay , among others, may have liquidated their positions partially or completely in the secondary deal. Amid all the cash burn and eye-popping valuations, early investors in India's ecommerce sector have been booking profits. In one of the first such instances, TOI had reported in December 2014 that Bengaluru-based venture fund Kalaari Capital had executed a secondary sale of shares worth $100 million in Snapdeal, while Flipkart's early investors like Accel Partners had part-sold their shares in a $150million round, giving them windfall gains.
Domestic e-commerce majors Flipkart and Snapdeal received a slug of new capital throughout 2014 up until middle of last year as they clocked stupendous growth while incurring huge losses on the back of deep discounting.
However, in the past six to eight months, valuations of these companies have started to get questioned in an overall cautious market. To add to that, e-commerce giant Amazon has been snapping at their heels, giving the local players a dogged fight.
According to filings made to the Registrar of Companies (RoC), Singapore's Brother Fortune Apparel pumped in fresh capital. Besides, Bennett, Coleman & Co Ltd (BCCL), the parent of the Times Group which publishes this newspaper, has been issued 15,638 warrants for about Rs 25 crore.
Commenting on the fundraise, Snapdeal CFO Anup Vikal said in a prepared statement, "We see these investments as a continuing endor sement of Snapdeal's strategy to build India's most reliable and frictionless commerce ecosystem."
Snapdeal's latest fund infusion comes at a time when its competitor Flipkart -- India's largest e-commerce company, valued at $15 billion -has also held initial talks with investors to rack up $500-750 million in fresh capital. The Indian arm of Amazon received Rs 6,700 crore over the past one year to push the pedal on growth.
Japan's SoftBank is the largest shareholder in Snapdeal, having led a $627-million round in October 2014.For the year ended March 31, 2015, Snapdeal's losses grew five times to Rs 1,328 crore according to RoC documents. TOI reported last year, quoting Kunal Bahl, co-founder & CEO of Snapdeal, that the online retailer was closing in on a $4-billion gross merchandise value, or GMV, runrate.
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