BackeBay to sell one-third Snapdeal stake in next funding round
eBay held close to a 9% stake in Jasper Infotech, which runs Snapdeal, after Japan's SoftBank in October announced a $627 million investment
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New Delhi/Bengaluru: eBay Inc., one of the most influential shareholders in Snapdeal, is looking to sell about one-third of its stake in the next funding round of India’s second-biggest online marketplace, three people familiar with the plan said on Monday.
The US-based online marketplace held close to a 9% stake in Jasper Infotech Pvt. Ltd, which runs Snapdeal, after Japan’s SoftBank Group in October announced a $627 million investment in the Indian company.
eBay now wants to sell about 30% of the holding, the three people said on condition of anonymity.
Mint reported in May that Snapdeal was in talks with Taiwan-based phone parts supplier Foxconn Technology Group and Chinese e-commerce giant Alibaba Group Holding Ltd to raise money. Both Alibaba and Foxconn are expected to buy a combination of new and existing shares.
“Foxconn is buying some of eBay’s stake," said one of the three people cited above. Mint could not independently verify the other investors eBay may be selling its stake to.
eBay, which is referred to as the lone “strategic investor" in Jasper Infotech in the latter’s official documents, has significantly increased its investment in India in the last six months. It is expected to channel the proceeds of the stake sale into its India business.
According to documents filed with the registrar of the company, eBay has infused close to ₹ 430 crore in eBay India Pvt. Ltd since March.
eBay launched its Indian operation in 2004 by acquiring Baazee.com long before current market leaders Flipkart, Snapdeal and Amazon started their e-commerce businesses in the country. But the company has lagged behind rivals because of a relative lack of focus and funding by its US-based parent and several top management exits.
The stake purchase in Snapdeal by the US-based online marketplace in April 2013 was seen as eBay’s best bet for building a meaningful presence in India.
In May, Mint reported that eBay may have retained the right to buy a controlling stake in Snapdeal and the company would appear to have stronger shareholder rights in relation to fellow investor SoftBank Group.
However, the proposed part exit indicates the company is revisiting its India strategy.
Some of the other Snapdeal investors, including Bessemer Venture Partners and Kalaari Capital, have also cashed out some of their gains over the past six months.
“With so many new investors coming in, eBay was reduced to being a small shareholder. Hence it is a good time for eBay to do a secondary sale," said Sanjeev Krishan, transaction services and private equity leader at PricewaterhouseCoopers India.
“It only makes sense to hold on to the stake if you have the vision or intent to leverage
the business. But eBay’s plans have been ambivalent and they were getting left out because of the competition," Krishan added.
According to two of the three people cited above, Snapdeal hasn’t received the kind of valuation it has been eyeing in its next round of funding.
Snapdeal was valued at roughly $2 billion (about ₹ 12,400 crore) when it raised money from SoftBank Group. Its valuation increased to roughly ₹ 28,000 crore after it acquired mobile recharge firm FreeCharge, Mint reported on 18 April.
Snapdeal declined to comment. Foxconn and Alibaba did not respond to emails seeking comment.
In the first week of August, Foxconn chairman Terry Gou, at a conference in Delhi, confirmed that the company was investing in Snapdeal, saying that e-commerce reduces the dependence on conventional supply chain and “shortens the distance between goods and consumers".
For Alibaba, a stake in Snapdeal could help the Chinese e-commerce giant further strengthen its foothold in
India’s e-commerce sector after its payments arm, Ant Financial Services, invested $575 million in Paytm, an online payment solutions provider and marketplace.
Founded in 2010 by Kunal Bahl and Rohit Bansal as a deals site, Snapdeal, promoted by New Delhi-based Jasper Infotech, has become the biggest local rival to Flipkart.
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