Snapdeal is negotiating terms with Alibaba for a record funding round of Rs 6,200 crore ($1 billion), two people directly aware of the talks said, as the Delhi-based marketplace seeks a combination of money and a marquee name in its three way fight for dominance of India’s online retail sector. Snapdeal also cut many deals with private company to exclusive launch brand on their platform, also providing snapdeal coupons to many partners as an aggressive marketing strategy for consumer retention and increasing sales.
Jasper InfoTech, the company which owns Snapdeal, is aiming for a valuation of at least $5 billion (Rs 30,000 crore) in this latest round, according to the sources. Just in October, it raised Rs 3,800 crore ($627 million) from Japan’s Softbank, valuing the company at Rs 11,200 crore ($1.8 billion).
“Snapdeal has a term sheet from Alibaba, but is not getting the valuation (it) wants,” said one of the sources, referring to the document that indicates an investor’s initial interest.
“On the other hand, private equity firms are making higher offers, so it can likely be a joint investment,” said one of the sources quoted earlier. A team of Snapdeal’s top executives, including Wharton Business School alumnus and co-founder Kunal Bahl, was in China last week for negotiations with Alibaba, according to the person quoted above. “The company is still shopping its term sheet,” he said. The investment by SoftBank allowed Snapdeal to compete on even terms against market leader Flipkart and US-based Amazon in a market that is estimated by Nomura to be worth $23 billion (Rs 1.5 lakh crore) by 2018. All online retailers are offering deep discounts to lure buyers, in the process burning large amounts of cash. Alibaba, the world’s largest ecommerce company with a market cap of $210 billion, has been looking to increase its footprint in India, considered one of the most lucrative markets for consumer Internet globally.
In 2014, Alibaba held talks with Snapdeal for a possible investment ahead of the visit of its chairman Jack Ma to New Delhi in November. During the visit, Ma told ET that he was ready to invest more in Asia’s third-largest economy. In February, the Internet conglomerate made its first investment in India when affiliate Ant Financial Services Group bought a 25% stake in One97 Communications, which owns and operates mobile and ecommerce platform Paytm.
According to investor reports accessed by ET, Snapdeal could record a five-fold increase in losses going up to $250 million (Rs 1,500 crore) this fiscal. Co-founded by Bahl and Rohit Bansal, Snapdeal is on course to sell goods worth $3 billion by the end of the current financial year in March, according to industry estimates.
Snapdeal’s investors also include eBay, BlackRock, the world’s largest asset manager, Ratan Tata, PremjiInvest, the personal investment arm of Wipro Technologies Chairman Azim Premji, and hedge funds Myriad Asset Management and Tybourne Capital.
“Snapdeal has been negotiating with Alibaba since their last round and every time they differ on the valuation front,” said one source.
In Talks to Acquire Komli Media for $300 Million
On the other hand, Snapdeal is in advanced talks to acquire Komli Media in a deal that values the ad technology company at about $300 million, the same as when it raised funds from investors last year.
The deal will give Snapdeal engineering capabilities in Bengaluru as it battles Flipkart, as well as help it notch up advertising revenues by selling space on the ecommerce site, according to a person familiar with the deal. “These guys have so much traffic, it makes sense to monetize it,” said another person. According to audience measurement platform SimilarWeb, Snapdeal had an estimated 79.8 monthly visitors in February and Flipkart, 110.5 million. Even after selling tons of offers and partnership its still increasing to provide snapdeal coupon codes and special offer days to the consumers.
Amar Goel CEO & Chairman of Komli Media declined to comment on the deal. Komli, founded in 2006, has raised $97 million in five rounds from investors including Nexus Venture Partners and Peepul Capital. It employs nearly 300 people across India and started as a digital advertising network — buying and selling advertising inventory online in Asia Pacific.
Goel also set up Pubmatic, focused on technology for online advertising in the US in 2008. Inmobi, another ad-network based in Bengaluru, was founded a year later and went on to raise $200 million from Japan’s Softbank.
Sources – Economic Times