Kishore Biyani says Future Group will use FabFurnish's online platform and delivery model to grow presence in markets with no offline stores
New Delhi: The Kishore Biyani-led Future Group is buying online furniture store FabFurnish.com—its first acquisition of an Internet store.
Future Group, which owns a home and furnishing business under the brand HomeTown, confirmed the deal.
“We will leverage FabFurnish’s online platform and delivery model to grow our presence in markets where we do not have offline stores or have minimal reach," said Kishore Biyani, chief executive officer of Future Group.
Future Group may pay anywhere between ₹ 15 crore and ₹ 20 crore in cash to buy the Rocket Internet-backed start-up, two people aware of the development said on condition of anonymity.
Future Group did not comment on the financial details of the acquisition. FabFurnish did not respond to an email seeking comment.
Once closed, the deal will mark Berlin-based Rocket Internet’s first exit in India. Rocket Internet has been looking for buyers for its portfolio including Fabfurnish, Foodpanda and Jabong, all of which have been struggling to grow their businesses and losing market share.
FabFurnish has close to ₹ 10-15 crore in the bank, which means the net valuation would be much lower than the ₹ 15-20 crore Future Group may pay for it, said one of the two people cited above. Future Group would be largely be paying for the FabFurnish brand, this person said.
Future Group will retain FabFurnish’s brand and will use the online platform to take Home Town online.
FabFurnish’s management team and about 100 odd employees are likely to join Future Group, the two people added.
HomeTown is expected to become a ₹ 800 crore-1,000 crore business by the end of current financial year for Future Group, according to Biyani.
On Tuesday morning, Fabfurnish sent e-mails to its vendors requesting “no dues" certificates. The mail said that these certificates, which proved the vendors were owed no money by FabFurnish, needed to be submitted to Future Group. Mint has seen a copy of the e-mail.
Despite being an early entrant, FabFurnish (Alix Retail Pvt. Ltd) could not sustain its advantage and succumbed to competition.
It faced tough competition from companies such as Pepperfry (run by Trendsutra Platform Services Pvt. Ltd) and Urban Ladder (Urban Ladder Home Décor Solutions Pvt. Ltd) that are funded by investors such as Goldman Sachs and Sequoia Capital.
Pepperfry raised $100 million in a Series D funding round led by Goldman Sachs Group Inc. and Zodius Technology Fund in July last year. Urban Ladder raised $50 million in a round led by Sequoia Capital and TR Capital last April.
Last July, FabFurnish’s founders Mehul Agrawal and Vikram Chopra quit the company to start their own venture. FabFurnish appointed senior directors Ashish Garg and Ankita Dabas to take over management functions.
Later during the year, FabFurnish, which earlier sold private labels besides promoting merchants on its platform, became a full-fledged marketplace. During the same time, the company also fired almost one-fourth of its workforce.
Gurgaon-based FabFurnish was founded in 2012 by Chopra, Agrawal and Vaibhav Aggarwal. FabFurnish has raised over $30 million from Rocket Internet and Kinnevik so far.
Rocket Internet, an e-commerce-focused venture capital firm and start-up incubator, is known for creating clones of well-known Internet businesses and then selling them once the business gains scale. However, India has not played out according to Rocket’s expectations.
Rocket Internet, together with Kinnevik, has been aggressively seeking a buyer for online fashion retailer Jabong, which also has been struggling to grow its business and has lost significant market share to competitors such as Myntra and the fashion business of Amazon and Flipkart. In October, Mint reported that Foodpanda was also looking for potential buyers in India (mintne.ws/1OjXgs8).