Snapdeal files IPO papers to raise Rs 1,250 crore via fresh issue

SoftBank-backed Snapdeal has filed its draft red herring prospectus (DRHP) for its initial public offering (IPO), which will comprise a fresh issue of equity shares worth up to Rs 1,250 crore and an offer-for-sale (OFS) of up to 30.77 million equity shares by existing shareholders.

However, Snapdeal’s founders, Kunal Bahl and Rohit Bansal, will not sell their shares. Nor will BlackRock, Temasek, eBay, Intel Capital, Nexus Venture Partners, Tybourne, RNT Associates, and Premji Invest.

Eight of the 71 shareholders, including SoftBank, Foxconn, Myriad Opportunities, Madison India, Sequoia Capital, and Ontario Teacher’s Pension Plan Board, have offered to sell a portion of their shareholdings, together amounting to slightly less than 8 per cent of the company’s pre-offer equity share capital.

Axis Capital, BofA Securities India, CLSA India, and JM Financial are the book-running lead managers for Snapdeal. The proceeds of the issue will be for funding growth, expanding logistics capabilities, and enhancing the company’s tech infrastructure, Snapdeal said.

“Our Company proposes to utilise Rs 9,000 million towards funding our organic growth, which will entail expenditure on marketing and promotions, as well as enhancing our technology infrastructure, as we believe them to be the two key factors which contribute to our organic growth,” the company said in its DRHP.

In the financial year ended March 31, 2021, Snapdeal recorded revenues from operations at Rs 471.756 crore. Its restated loss for the financial year was Rs 125.440 crore.

The company’s delivered units have grown 86.3 per cent over the last two quarters from 4.61 million in Q4 FY21 to 8.59 million in Q2 FY 22. Once a competitor of Flipkart, with which there was an attempt to merge in 2017, and Amazon, Snapdeal fell behind its larger rivals.

Thereafter, it changed its orientation to being a player focused on Bharat, and began targeting value-seeking, middle-income, price-conscious buyers who live predominantly in smaller cities of India.

Snapdeal receives more than 86 per cent of its orders from outside metros.

Over the past three years, Snapdeal has changed gear from being an all-encompassing e-commerce marketplace to operating in hyper-focused mode, with more than 90 per cent of the products on its platform priced under Rs 1,000. More than 77 per cent of its business comes from repeat customers.

Snapdeal’s asset-light logistics network covers 96.65 per cent of India’s pin codes. It served buyers in more than 2,500 cities during the six months ended September 30, 2021. As part of its expansion plans, Snapdeal intends to expand into omni-channel distributions through partner-driven offline stores.