 "Jabong upbeat on sale deal after signs of profit")
Fashion portal Jabong, long scouting for buyers, is more optimistic of a deal, having achieved unit-level profitability during the first quarter. Investors of Jabong, backed by German incubator Rocket Internet, are in talks with multiple players to sell the company.
According to sources, Jabong is exploring a combination of options — majority sale or complete sellout. Sources said Rocket Internet and Swedish investment firm Kinnevik, the largest stakeholders in Jabong's parent, Global Fashion Group, are in talks with Aditya Birla Group’s e-commerce venture, Abof and Snapdeal, among others. The value of the deal would be in the range of $200-$250 million, estimates suggest.
Company insiders say Abof is interested as it plans to expand and wants to have a well-known brand on which it can piggyback growth and sales. “Abof is the latest entrant in the market and it wants a known brand like Jabong that already has a vast number of customers. Snapdeal, on the other hand, has been trying hard to fight back Myntra but till now has not been able to do so. That’s why they are both interested in acquiring Jabong,” said a source.
Jabong had found it tough to find buyers last year after significant losses. Other than Abof and Snapdeal, some private equity funds have also had talks with the company.
Last September, Snapdeal co-founder Kunal Bahl had said the company had been approached by Jabong, for possibly investing in the fashion vertical major.
“Anytime anyone wants to look at raising money in this market or think about getting a strategic partner on-board, they come and talk to us. We are always considering companies in every space because it is important for us to keep growing our eco-system,” he had told Business Standard, without discussing the specifics. Sources said if talks move further with Snapdeal, it might be for a stock deal.
According to Jabong, the company plans to become profitable by mid-2017. At present, it has around 600 employees and plans to go slow on increasing its head count. In the first quarter of this year, the company said it posted Rs 244 crore revenue, an increase of 14 per cent from last year.
According Rocket Internet, online lifestyle retailer Jabong has narrowed down its gross loss to Rs 46.7 crore for 2015, which in 2014 stood at Rs 159.5 crore on the back of cutting down discounts.
