Jabong to raise $200 mn for new platform expansion

The company's cash position came down to Rs 540 crore as of the first nine months in 2014

Fashion e-tailer Jabong is seeking a valuation of over $1 billion for the next round of funding, which could be around $150-200 million.  This is in line with Praveen Sinha-led company’s participation in Global Fashion Group (GFG), expected to go live early April.

The company would need additional cash once GFG goes live.

Jabong, for GFG, will be merged with Dafiti of Latin America, Namshi of West Asia, Lamoda of Russia, and Zalora of Southeast Asia and Australia. GFG would emerge as one of the biggest internet empires outside the US and China, on the lines of Amazon and Alibaba.

The five portals, put together at GFG, will have 4.6 million active customers and generate 463 million of gross merchandise volume annually. Kinnevik, Rocket Internet, and Access Industries together have a share of 56 per cent in GFG.

Berlin-based Rocket Internet is one of the key investors in Jabong and it is expected to participate in funding. Olivier Samwer-led Rocket, in its latest report, outlined its thrust on India.

“The regulatory approvals for GFG are in place and the platform should be active sometime in April. Funds would be required at that time as the supply chain and the techno infrastructure need to be strengthened,'' said a source. The company clocked a gross merchandise value (GMV) of $600 million (Rs 3,600 crore) in 2014 compared with $300 million (Rs 1,800 crore) in 2013, it is learnt. In the next round of funding, valuations would be pegged at least two to three times the GMV, a source said.

Jabong’s cash position has come down to Rs 540 crore as of nine months in 2014 against Rs 850 crore in the corresponding period during the previous year, pointed out the latest report published by Rocket Internet, signalling a need for fresh cash once the scale hits the new level with GFG.

Sinha did not respond to calls and text messages.

Fresh funds are also needed to help fashion portal Jabong fight it out with bigger rivals such as Myntra, now owned by Flipkart, and Exclusively.com, recently acquired by Snapdeal. Also, the talks between investors of Jabong and Amazon seem to have not been fruitful so far and a merger looks off the radar for the time being.  Jabong’s revenues more than doubled to Rs 540 crore in the nine-month period ending 2014, compared to Rs 201 crore the year-ago period.

Fashion e-tailing has registered faster growth compared with other segments in e-commerce. Margins too are higher in the segment.

Jabong, for the GFG, will be merged with Dafiti of Latin America, Namshi of West Asia, Lamoda of Russia and Zalora of Southeast Asia and Australia. GFG would emerge as one of the biggest internet empires outside the US and China, on the lines of Amazon or Alibaba.

 

The five portals put together at GFG will have 4.6 million active customers and generate $463 million of gross merchandise volume annually. Kinnevik, Rocket Internet and Access Industries together have a share of 56 per cent in GFG.