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New Delhi: : Online fashion retailer Jabong has seen a steep drop in its valuation as it struggles to turn around its business amid a funding crunch.

In September 2014, Jabong was merged with four other international online fashion businesses by Germany’s Internet investment group Rocket Internet and Swedish investment bank Kinnevik to create a company called Global Fashion Group that was worth €2.7 billion (around 21,600 crore) then.

GFG raised €150 million (about 1,060 crore) from Rocket Internet and Kinnevik last July, at a valuation of €3.1 billion.

Barely 10 months later, GFG is now valued at only a third of that sum. Last week, GFG said it raised $339 million (€300 million) from Kinnevik and Rocket Internet at a valuation of $1.13 billion (€1 billion).

GFG’s new pricing implies Jabong’s valuation has slid from its previously disclosed worth of €388 million at the end of 2013.

Jabong was worth €388 million in December 2013, and it was one of the most valuable companies owned by Rocket Internet. Rocket Internet, which has large stakes in more than 60 e-commerce firms across Africa, Asia and Latin America, went public in Germany at a valuation of more than $8 billion in October 2014.

Over the past two years, however, Jabong’s fortunes have reversed dramatically. Despite launching as late as 2011, Jabong was running neck-and-neck with older rival Myntra by March 2014.

Since then, the company’s entire senior management team, including all of its co-founders, have left, its sales growth has slumped and it has lost significant market share to Myntra, Amazon and Flipkart (which owns Myntra). Jabong’s sales growth fell to just 7% in calendar 2015, from 136% in 2014.

GFG has been looking to sell Jabong and has held initial talks with payments service provider Paytm and Aditya Birla Group, Mint reported on 21 September last year.

Late last year, to turn around its business, Jabong hired a new senior management team including a new CEO, Sanjeev Mohanty, from Benetton India.

Around the same time, Jabong hired investment bank Avendus in a bid to attract independent capital from private equity partners or strategic investors, according to three people close to the matter.

But the company is nowhere near a turnaround and it has been struggling to attract a buyer or raise money, these three people said. GFG may cut funding to Jabong from now, they said.

“The company has failed to meet targets set by global investors and hence India is not on the priority list," said one of the three people cited above.

When contacted by Mint, Mohanty said Jabong is a wholly owned unit of GFG and does not have a stand-alone valuation.

“The (€300 million funding round by GFG) demonstrates the belief of internal shareholders in the fashion e-commerce opportunity in all its six markets and to fully capitalise them. As per the quarterly rolling forecast, the funding (to Jabong) comes in on a monthly basis. We remain committed to expanding and improving, not exiting, our business,“ Mohanty said.

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