NEW DELHI – Taiwan’s Foxconn and Chinese e-commerce giant Alibaba are investing about $200 million each in Snapdeal, while Softbank — the largest shareholder in Snapdeal — is infusing additional $100 million, sources said. This makes Jasper Infotech —which runs Snapdeal — richer by about $500 million.
After closure of this fresh investment, Softbank would further cement its position of largest shareholder in Snapdeal with additional about 2% stake. Alibaba and Foxconn are picking up about 4% each, sources said. Softbank had invested about $627 million for about 30% stake in Snapdeal last year.
It is learnt that the latest round of funding has come at a valuation of $5-6 billion. Flipkart is looking at a valuation of $15 billion.
When contacted, a Snapdeal spokesperson said, “We do not comment on speculations.” An email sent to Softbank remained unanswered.
Snapdeal has been on the deal street for quite some time but differences over valuation of the company delayed arrival of fresh money.
Last year, Snapdeal raised close to a billion dollars, majority of which came in the form of Softbank’s investment, while Flipkart raised about $2 billion.
Jack Ma-led Alibaba picking up stake in Snapdeal is significant as both Snapdeal founders Kunal Bahl and Rohit Bansal have been vocal about trying to replicate the Alibaba model for Indian e-commerce ecosystem.
Flipkart reportedly has closed a funding of about $700 million recently, while American e-commerce giant Amazon is planning to splurge about $5 billion in Indian operations. The fresh funding for Snapdeal would spice up the battle among these top-level e-commerce players in the country ahead of Diwali, considered to be key festive time to make a killing by the e-commerce players.
The other key investors in Snapdeal are eBay, Kalaari Capital, Nexus Venture Partners, Bessemer Venture Partners, Intel Capital and Saama Capital, Temasek, BlackRock Inc, Myriad, PremjiInvest and Tybourne, and IndoUS Venture Partners. Ratan Tata also has invested in Snapdeal in his personal capacity.
Snapdeal, much like rival Flipkart, has been spending hefty amounts on tech upgradation, customer acquisitions and to feed its discount-based business model. It has also closed series of acquisitions in the new age internet companies space with the biggest being the Freecharge deal.
Snapdeal is eying to topple Flipkart this year by clocking gross merchandise value (GMV) of $9-10 billion as against Flipkart’s $8 billion.
