The fresh round of funding values Snapdeal at $4.7- 5 bn; EBay Inc is selling part of its stake
New Delhi : Online marketplace Snapdeal has raised USD 500 million (about Rs 3,269 crore) in a fresh round of funding from a clutch of investors led by Alibaba Group, Foxconn and SoftBank where eBay Inc is cutting its stake. Existing investors Temasek, BlackRock, Myriad and Premji Invest also participated in the latest funding round, Snapdeal said in a statement.
While Jasper Infotech Pvt, which owns Snapdeal, did not specify the individual investments being made, FIH Mobile Ltd – a unit of Foxconn — said it is picking up 4.27 per cent stake in the company for $200 million.
The company had raised more than $1 billion, from investors including Softbank ($627 million) and iconic business leader Ratan Tata (personal investment).
Foxconn’s investment, which was by way of buying 2,967 compulsorily convertible cumulative preference shares from eBay for $50 million cash and subscribing to 79,113 such shares of Jasper for $150 million, values Snapdeal at about $4.7- 5 billion.
“We see this milestone as a significant endorsement of Snapdeal’s strategy and commitment to create life changing experiences for millions of small businesses and consumers in India,” Snapdeal Co-Founder and CEO Kunal Bahl said.
He added, with global leaders like Alibaba, Foxconn and SoftBank supporting the company, its efforts towards building India’s most impactful digital commerce ecosystem will be propelled further, enabling it to contribute towards creating a Digital India.
Snapdeal, which began as a coupon platform similar to Groupon Inc when it was founded in February 2010, is one of India’s three biggest e-tailers. US company eBay said it would retain “a significant portion” of its original investment in Snapdeal and the partial stake sale will help it to earn a strong return on capital invested.
It said the cash would be redeployed in other areas of eBay’s business, adding that it will focus on boosting its presence in India, which it considers an important market in its fast-growing Asia Pacific region.
Ebay said over the past two years, the valuation of Snapdeal has significantly increased and the sale will enable it to earn a strong return on its invested capital and strategically redeploy it into other areas of its business. Snapdeal, founded in 2010, has more than 1,50,000 sellers on its platform with over 15 million products and a reach to over 5,000 towns and cities across the country. PE firms and angel investors are aggressively funding start ups and internet-led businesses in India, targeting higher returns in the years to come. Rivals Flipkart and Amazon have also committed to invest about $8 billion over the next few years in India, where eCommerce is growing at a blazing pace, driven by affordable smartphones and increasing internet penetration.
