 "Snapdeal")
Now, the firm might just manage to get less than a sixth of the valuation when it is merged with larger rival Flipkart. Sources said that the deal might happen within the next three weeks. The move, led by its largest investor Softbank, after months of hectic parleys, heated discussions, scrapping proposals, could value Snapdeal at around $1 billion.
According to four people in know of the developments, after Jasper Infotech Limited the holding company of Snapdeal, board of directors were not able to reach a consensus on the terms of sale on Tuesday's meeting, a new proposal with tweaks is being prepared by Softbank and would be sent to the board in the next few days.
Kalaari Capital and Nexus Venture Partners the two early stage investors in Snapdeal, want Softbank to value not just the e-commerce company, but its two units - Vulcan Express and Unicommerce with a higher valuation.
"Their argument is that Vulcan Express Private Limited and e-commerce management firm Unicommerce should be valued separately and not made part of Snapdeal's valuation as they are either profit making or would about to do so," said one of the people in the know of the talks.
Both Kalaari and Nexus, among the early backers of Snapdeal have vetoed Softbank's proposal to value the e-commerce company between $600-800 million. Softbank, which has written off the value of its investments in the company, is looking at a fire sale in exchange for equity in Flipkart, India's largest e-commerce firm that has revived to take on global rival Amazon.
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"They want the total valuation to be around $1.2 billion to $1.5 billion minimum. The new proposal to the board would be send in the next few days, the final deal might happen in the next two weeks," added a source. The deal would lead to exit of the two founders - Kunal Bahl and Rohit Bansal from Snapdeal, which started as a portal to offer discount coupons in 2000, before shifting to e-commerce.
SoftBank which invested around $900 million in Snapdeal and is the major stakeholder in the company as well as digital payments platform Freecharge, is reportedly planning to invest around a $1.5 billion in Flipkart for a double-digit percentage stake in the Bengaluru based marketplace.
Paytm, which had done due diligence of Snapdeal earlier, is planning to go on its own.
"Alibaba which was also part of a $600 million round in Snapdeal, wants an exit. Paytm already has the biggest online mobile wallet in the country and a revamped marketplace which the company is aggressively expanding," said a source.
Sources also said that Kalaari Capital managing director Vani Kola has resigned from the board of Snapdeal however it still holds veto powers. "This move should be seen as softening of the board's stance. It is just a matter of now bringing everyone on board. All this would be figured out within the next couple of days," said another source.
Snapdeal, which has been struggling to raise funds from investors, went on a rationalisation spree in February, sacking employees, shutting down unprofitable divisions and offices to prepare itself for a sale.
The journey so far
2011: Pivots to an online marketplace, inspired by Chinese e-comm major, Alibaba
11 Total number of funding rounds
$1.56 bn: Total number of funding rounds
23 Total number of investors
Investors: SoftBank Corp, Ru-Net Holdings, Tybourne Capital, PremjiInvest, Alibaba Group, Temasek Holdings, Bessemer Venture Partners, IndoUS Ventures, Kalaari Capital, Saama Capital, Foxconn Technology Group, Blackrock, eBay, Nexus Ventures, Intel Capital, Ontario Teachers' Pension Plan, Singapore-based investment entity Brother Fortune Apparel and Ratan Tata
< Kunal Bahl, Co-founder & CEO, Snapdeal
