Jasper Infotech's Online marketplace Snapdeal has closed a funding round of $500 million (Rs 3,259 crore) from Foxconn, Alibaba Group and its largest stakeholder SoftBank...
Jasper Infotech's Online marketplace Snapdeal has closed a funding round of $500 million (Rs 3,259 crore) from Foxconn, Alibaba Group and its largest stakeholder SoftBank, its first in nearly a year after disagreements over its valuation protracted negotiations.
Foxconn, the maker of Apple's iPhone, said it invested $200 million for a 4.27% stake in Jasper Infotech, which owns and operates Snapdeal.com. The latest round valued Snapdeal at $4-4.5 billion, according to sources who declined to be identified. This could not be independently verified.as per industry insiders,Snapdeal was in talks with investors to raise at least $400 million at a valuation of about $5 billion. The negotiations, however, got extended mainly as Chinese ecommerce giant Alibaba was unwilling to invest in the company at a valuation of over $3.5 billion, the sources said.
"Alibaba was quite adamant in its position of not writing a cheque at that valuation, and that has, perhaps, played a role in Snapdeal not getting valued at a figure it was looking at," one of them said on condition of anonymity. Eventually, Alibaba and Japan's SoftBank are estimated to have invested $100-125 million each in the company, according to the sources.
Taiwan's Foxconn injected money into Snapdeal through its investment arm FIH Mobile, which, in turn, routed the investment via its Singapore-based subsidiary Wonderful Stars Pte.
The soaring valuations of Indian ecommerce ventures, including for new firms such as Shop-Clues and Paytm, have emerged as a source of concern for investors, who point to unclear profitability models, heavy discounting and operational issues as roadblocks. Also, the valuations typically factor in ambitious growth targets for the next twothree years.
The result: investments have slowed into ecommerce companies this year as compared with the big deals struck in 2014. Even so, the latest funding for Snapdeal comes as rivals Flipkart and Amazon rapidly expand their operations, looking to dominate in India's highly competitive ecommerce sector.
Amazon, the world's largest online retailer, is readying a $5-billion war chest to grow India into its biggest market outside the US.
The round also solidifies the alliance between SoftBank, Alibaba and Foxconn as the three investors look to walk in lock-step in scouting for investments in Asia's third-largest economy. Besides, India's ecommerce sector is estimated to touch $50 billion by 2020, up from $3 billion in 2014, according to a UBS report published in April.
Snapdeal previously raised capital in October, when it brought SoftBank on board as an investor after the Japanese Internet, media and telecom investment giant pumped in $627 million in the company for a 33% stake.
Separately, eBay Inc, an early backer of Snapdeal, announced it had sold a part of its 9% stake in the Gurgaon-based company for an undisclosed amount.
According to a regulatory filing by Foxconn, as part of a secondary transaction, the world's largest contract manufacturer has purchased shares worth $50 million from eBay for a 1.16% stake in Snapdeal. It has directly invested an additional $150 million in the online marketplace. "Going forward we will focus on accelerating eBay's presence in India, and empowering customers through technology," the San Jose, California-headquartered ecommerce company said in a statement.
Existing Snapdeal investors Singapore-based investment firm Temasek; BlackRock, the world's largest asset manager; Hong Kong-based hedge fund Myriad Asset Management; and PremjiInvest, the family office of Wipro Chairman Azim Premji participated in the latest equity financing round.
Founded in 2010 by Wharton alumni Kunal Bahl and IIT-Delhi graduate Rohit Bansal, Snapdeal is India's largest online marketplace in terms of sellers transacting on its platform.
In total, the company, which has 1.5 lakh sellers on its platform, has raised more than $1.6 billion in funding since inception.
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