Snapdeal, SoftBank have discussed a valuation range of $3-4 billion for the fundraising, but it is still trying to attract new investors at a higher valuation
New Delhi/Bengaluru: Snapdeal, run by Jasper Infotech Pvt. Ltd, has initiated discussions to raise fresh funds largely from existing investor SoftBank Group Corp. at a significantly lower valuation than the $6.5 billion peak it touched in its previous round, three people familiar with the matter said.
Snapdeal and SoftBank have discussed a valuation range of $3-4 billion, but the online marketplace is still trying to attract new investors at a higher valuation, the people mentioned above said on condition of anonymity.
The amount of the fundraising is yet to be finalized.
We are well capitalized and we are not engaged in any active financing discussions- A Snapdeal spokesperson
If the deal materializes, it will be the first time Snapdeal’s valuation will take a hit. While 2016 saw several investors mark down industry leader Flipkart’s valuation by as much as 40%, one of Snapdeal’s mutual fund investors, BlackRock Inc., has maintained its valuation estimate of the online marketplace.
“We are well capitalized and we are not engaged in any active financing discussions," a Snapdeal spokesperson said in an emailed response to a query.
SoftBank declined to comment.
Snapdeal has also held talks with strategic and financial investors to part-sell online payments firm Freecharge, which it acquired in April 2015. The deal has not materialized due to an expectation mismatch in valuations
If the deal materializes, it will be the first time Snapdeal’s valuation will take a hit
Gurgaon-based Snapdeal has lost significant market share to rivals Flipkart and Amazon in the last 12-18 months, slipping to a distant No. 3 position. Cost-cutting efforts undertaken in 2016 have resulted in a lower cash-burn rate as the company looks to focus on profitability, not market share.
Other top investors include Kalaari Capital, Nexus Venture Partners, eBay Inc., Foxconn Technology Group and Alibaba Group Holding Ltd. Co-founders Kunal Bahl and Rohit Bansal now have a less than 6.5% stake in the company.
Snapdeal is currently sitting on over $250 million of cash in the bank but given a slow funding market, the company wants to build a war chest to fight competition from Amazon and Flipkart, according to two of the three people mentioned above.
Founded in 2010 by school friends Bahl and Bansal as a deals site, Snapdeal delivers goods to over 5,000 cities and towns in India.
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