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    Snapdeal in talks for $100m at valuation of $800m-1.2bn

    Synopsis

    The new round is expected to benchmark a new valuation for Snapdeal besides testing if its founders can win investor trust for the business after seeing a significant value erosion, said the first source mentioned earlier.

    Snapdeal had last raised a large round of fresh capital in February 2016, which valued the company at about $6.5 billion.
    (This story originally appeared in on Nov 12, 2019)
    BENGALURU: Snapdeal is in talks to raise about $100 million from new and existing investors, including Japan’s SoftBank, in what will be its first major fresh capital-raise in over three years, said two sources briefed on the matter. The Delhi-based company, which went through a pivot to focus on smaller towns and unbranded goods after its failed acquisition by Flipkart in 2017, has told new potential investors that SoftBank is committing to half of the round.

    Snapdeal is working with Bank of America Merrill Lynch as its adviser and talking to both local and global investors. The discussions between Snapdeal and various investors are happening at a valuation ranging from $800 million to $1.2 billion, said the two sources mentioned earlier, and the final number could change. The company is currently doing net revenue of about $140 million.

    Snapdeal had last raised a large round of fresh capital in February 2016, which valued the company at about $6.5 billion. While the potential acquisition by Flipkart, pushed by SoftBank, was expected at a valuation of $1 billion in 2017, after its failure Snapdeal co-founders Kunal Bahl and Rohit Bansal bought about 10% from existing investors at a valuation of below $100 million.

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    The new round is expected to benchmark a new valuation for Snapdeal besides testing if its founders can win investor trust for the business after seeing a significant value erosion, said the first source mentioned earlier. “Snapdeal is not going to compete with Amazon and Flipkart on marketshare and type of products being sold. They are selling the Bharat story to investors,” said the second source mentioned earlier.

    While unbranded goods have better margins, it also means that average order value is lower which makes it harder to recoup logistics costs, said these sources, while maintaining revenue growth and fall in losses. A SoftBank spokesperson declined to comment, terming it market speculation. “While we cannot comment on speculation…Snapdeal is experiencing high-quality growth with industry best economics and all our organisational efforts are devoted to furthering these business objectives,” said a Snapdeal spokesperson.
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