Azim Premji fund seeks clarity on Snapdeal sale in letter to board: report
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New Delhi: Amid talks of a merger between India’s largest online marketplace Flipkart and online retailer Snapdeal, the latter’s key investor Premji Invest has written to the board, asking questions about the sale of the company.
Premji Invest, the investment fund owned by billionaire Azim Premji and an investor in Snapdeal since 2014, wrote to the board a few days back.
The move comes on the back of a term sheet, a non-binding agreement under which an investment is made, being signed to facilitate the merger of Snapdeal and Flipkart, the Times of India reported.
Flipkart is nearing a final agreement to acquire rival e-commerce provider Snapdeal after winning support from the start-up’s three primary venture investors, but the contract still needs backing from two of India’s most powerful businessmen, reported Bloomberg last week. Several important investors have yet to sign on to the deal, including the family offices of Azim Premji, the billionaire chairman of tech services giant Wipro Ltd, and Ratan Tata, the former chairman of the salt-to-software conglomerate Tata Group, the report said.
The transaction is expected to value Snapdeal at $1 billion in a cut-price deal, according to Wednesday’s TOI report. The term sheet came through on Monday after Nexus gave a nod to the sale, added the report.
Now the due diligence process will start as Flipkart will get access to Snapdeal’s operations and its books.
“Minority investors like Premji Invest (which holds around 2% in the company) have been reportedly unhappy as Softbank led the merger talks. Kalaari Capital and Nexus Venture Partners, among the largest investors in the e-tailer with 8% and 10% ownership, respectively, have struck a settlement with SoftBank to sell their shares, while the smaller shareholders are unlikely to get compensated by the Japanese group which is orchestrating the sale of Snapdeal to Flipkart,” according to the report.
SoftBank holds around 33% stake in Snapdeal as its latest investor.