SoftBank looks to raise stake in Snapdeal
Bengaluru/New Delhi: Snapdeal’s biggest investor SoftBank Group is close to increasing its stake in the company to more than 38% from roughly 33% currently by buying shares from at least two of Snapdeal’s existing investors, ahead of Snapdeal’s next round of fund raising, two people familiar with the matter said on condition of anonymity.
Separately, independent director on the board Akhil Kumar Gupta, a senior executive at Bharti Enterprises, has picked up a small personal stake in the online marketplace.
Gupta bought equity shares worth more than Rs.5 crore in Jasper Infotech Pvt. Ltd, the e-commerce marketplace’s holding company, according to documents with the Registrar of Companies. Jasper Infotech is the promoter of Snapdeal.
Snapdeal and larger rival Flipkart have been adding senior corporate executives both on their boards and in their management teams to help the fast-growing companies manage hundreds of millions of dollars in funds in the scramble for market dominance. Flipkart appointed Aditya Agarwal, head of engineering at US-based cloud storage start-up Dropbox Inc., as an independent director last year.
Meanwhile, when SoftBank struck a deal to invest $627 million in Snapdeal in October, the Japanese company had agreed to pick up part of the stakes held by two existing investors in Snapdeal, the two people cited above said.
“There were some delays in closing the secondary deals because of administrative reasons. SoftBank has nearly finished them now and it will be done by the time Snapdeal goes for its next round of
funding,” one of the persons added.
Snapdeal, which has raised nearly $1.5 billion from investors so far, is likely to hit the market again to raise another round of funds over the next month because of strong investor demand, this person said.
“They don’t need to raise another round but given that Flipkart has built a big war chest and that there’s so much in-bound investor interest in Snadpeal, they will soon raise another round,” he added.
Snapdeal and SoftBank didn’t respond to emails seeking comments.
Snapdeal, Amazon India and Flipkart are pumping in huge amounts of capital to build large supply chains, increase their product assortment by adding third-party merchants sellers and fund deep discounts to lure shoppers. This expensive marketshare battle requires the privately-held local firms to continuously raise capital.
Flipkart raised nearly $2 billion last year while Snapdeal received more than $1 billion.