Snapdeal plans to raise as much as ₹2,000 crore through the proposed IPO
Work on the draft prospectus is in full swing. Axis Capital is acting as the lead banker to the IPO
Ecommerce startup Snapdeal Pvt. Ltd is planning to file draft papers for an initial public offering (IPO) by the end of December, two people aware of the development said, as it aims to join the bandwagon of technology IPOs.
The company, founded by Kunal Bahl and Rohit Bansal, is planning to raise as much as ₹2,000 crore through the proposed share sale, the people cited above said on condition of anonymity. This will include a mix of primary fundraise and secondary share sale by existing investors.
The proposed listing, if successful, will mark a comeback for the e-commerce company, which once competed with arch rivals Flipkart.com and Amazon.com Inc. for supremacy in the Indian e-commerce market.
Snapdeal eventually lost the e-commerce battle to its rivals, and at one point was close to being acquired by Flipkart in a transaction led by its investors. After a brief boardroom battle, founder Bahl managed to salvage the company from the sale.
“Work on preparation of the draft prospectus is in full swing. Axis Capital is acting as the lead banker to the IPO. The draft red herring prospectus (DRHP) will be submitted before the end of December, with the aim of hitting the market in the first half of the year 2022, preferably in Q1 of the calendar year," one of the two people cited above said.
The company will seek a valuation of around $1.5-2 billion in the share sale, he said, adding that the eventual value will depend on investor demand.
A substantial part of the IPO will be primary share sale to raise growth capital for the company.
“It will be mostly a primary issue. Snapdeal is filing for IPO as a professionally managed company and hence, its biggest investor SoftBank will need to sell a small part for its shareholding to come below 25%. Most other investors including Temasek, BlackRock, and Ebay will not be selling in the IPO," he said.
Softbank held a 35.67% stake in Snapdeal as of 31 March 2020, according to latest filings available with the Registrar of Companies, while founders Bahl and Bansal hold around 19%. Other prominent investors in the company include Albaba, Ratan Tata, Blackrock, Intel Capital, and PremjiInvest.
An email sent to Snapdeal remained unanswered till press time.
Snapdeal’s plans to go public on Indian stock exchanges come on the back of successful listings of a bunch of technology unicorns such as Zomato, PolicyBazaar, and Nykaa.
Collectively, technology companies have raised over ₹40,000 crore through IPOs in 2021.
To be sure, while loss-making technology companies have managed to create strong demand for their share sales, the steep fall in the share price of Paytm after its record breaking IPO may make investors more cautious on upcoming IPOs from the technology sector.
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