Snapdeal plans American listing in 2016-17

Delhi-based e-commerce company Snapdeal is gearing up for an initial public offering (IPO) in the US at a valuation of $5-6 billion, following arch-rival Flipkart.

Snapdeal had appointed merchant bankers for listing on an American stock exchange, company sources said.

The IPO, expected in 2016-17, will allow Snapdeal to raise capital and permit some of its investors to exit.

"An IPO is on the company's mind," said a person in the know of the developments. "It is a young company and needs preparation before opening itself to scrutiny listed companies undergo. Bringing on board bankers will give it time for preparation," he said.

SNAPDEAL’S AMERICAN DREAM

• The online marketplace has given mandate to bankers to start preparing for listing on US bourses
• This will help raise capital, while providing an exit to some of the investors of Snapdeal
• Arch-rival Flipkart is also looking to list shares in the US in 12-18 months
• Snapdeal is looking to list in 2016-17 at a valuation of $5-6 bn
• Japan’s SoftBank, one of the largest investors in Snapdeal, infused $627 mn last year
• Kunal Bahl had, in 2013, also planned for US listing but it was not executed

In 2013, Kunal Bahl, co-founder and chief executive officer of Snapdeal, had said the company was looking at a US listing but he did not divulge a deadline. The plans were not put in motion as Snapdeal focused on building its e-commerce platform to compete with the Bengaluru-based Flipkart.

 

A Snapdeal spokesperson said, "We do not comment on speculation."

"Snapdeal has a healthy valuation and with investors like Softbank it should be able to conduct a successful IPO whenever it wants," said Yugal Joshi, practice director at Everest Group. "However, one needs to see if its internal structures can withstand the scrutiny a listed company is subject to."

Snapdeal has raised over $1 billion since 2009, including two rounds of undisclosed funding. The company is backed by Tata Group Chairman Emeritus Ratan Tata and Wipro Chairman Azim Premji.

Its largest investor is Japan's SoftBank. It also has investment from American e-commerce company eBay.

Other investors include Nexus Venture Partners, Indo-US Venture Partners, Bessemer Venture Partners, Kalaari Capital, Intel Capital, Blackrock and Temasek Holdings.

Snapdeal was in talks with Chinese e-commerce company Alibaba for a stake sale but sources said the deal, pegged at $500-700 million, soured over valuation.

Sources said Flipkart's IPO was likely in the next 18 months. Flipkart is backed by Russian billionaire Yuri Milner's DST Global, Singapore's sovereign wealth fund GIC and Tiger Global. It has taken several initiatives to strengthen its leadership and trim costs.

Valued at $12 billion, Flipkart raised $2 billion in 2014. Since its launch in 2007, the company has raised $3 billion from a clutch of investors. Snapdeal raised $1 billion last year.