New Delhi: The board of online marketplace Snapdeal is expected to meet on Tuesday to discuss a potential sale to larger rival Flipkart, and will attempt to get investor Nexus Venture Partners on board for the deal.
The approval of Nexus Venture Partners is crucial for the proposed sale to proceed, according to people close to the development.
The seven-member board of Jasper Infotech Ltd, which operates Snapdeal, includes representation from investors SoftBank Group Corp., Kalaari Capital and Nexus Venture Partners, as well as co-founders Kunal Bahl and Rohit Bansal.
Snapdeal’s valuation is believed to be one of the hurdles to the likely sale to Flipkart, as Kalaari Capital and Nexus Venture Partners are not in agreement with the valuation set by SoftBank—the largest investor in India’s third largest e-commerce firm.
SoftBank has succeeded in getting Kalaari Capital on board, and once Nexus Venture Partners agrees, the Snapdeal sale to Flipkart could be announced in a matter of weeks, said the people quoted above.
The deal with Flipkart, if it happens, would mark the biggest acquisition in the Indian e-commerce space and could potentially change the landscape of the sector.
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Snapdeal was valued at $6.5 billion in its last funding round in February 2016. The valuation, however, has shrunk since then and the potential deal could be struck at a discounted rate, say industry watchers.
According to reports, a deal with Flipkart may see Snapdeal’s mobile wallet service Freecharge being sold separately. Paytm (One97 Communications Ltd), Flipkart and MobiKwik are said to be in the fray.
Indian e-commerce companies have seen funding dry up over the last few months as investors focus extensively on profitability and cutting down expenses.
With intense competition from deep-pocketed global rivals like Amazon, Flipkart and Snapdeal could face even more heat in the coming days.
Amazon founder and CEO Jeff Bezos had recently said the company will keep investing in the Indian market to strengthen technology and infrastructure. The US-based firm has committed investments worth $5 billion in the Indian market.