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Kaalari Capital approves SnapDeal’s sale to FlipKart

flipkart snapdeal merger
Kaalari Capital has agreed with terms set by Softbank for SnapDeal's sale to Flipkart. The proposed deal will value SnapDeal at around $1 Billion.

Amidst the hard times, SnapDeal has got the consent of one of the easy investors, Kaalari Capital for the proposed sale to Flipkart. According to a couple of highly placed sources, Kaalari Capital has agreed on the conditions put together by Softbank to sell Snapdeal to the homegrown rival, Flipkart. If the deal successfully completes, it will reshape the Indian eCommerce market, which is worth $16 billion already.

Softbank, the leading investor in SnapDeal, has been trying to come on common terms with other investors to sell Snapdeal for around ₹6500 Crores ($1 Billion). However, this is not quite acceptable to the early investors in Snaldeal, Kaalari Capital and Nexus Venture Partners, because of the fact that once the eCommerce company was valued at ₹42,200 Crores ($6.5 Billion), way over the proposed sale price.

As per the shareholder agreement of Jasper Infotech, parent company of SnapDeal, Softbank needs approval from at least 2 more shareholders in order to sell the company. Kaalari Capital now seems on board with an understanding that it will work with Softbank down the line. The negotiations between Nexus Venture Partners and Softbank are still underway. There is, however, no clarity over whether the founders of SnapDeal, Kunal Bahl and Rohit Bansal have agreed to the proposed sale or not.

A few days back, there were rumours which stated that Softbank might be looking to make an investment in PayTM, provided the digital payment leader buys out Freecharge. Now the rumours are also rift that Flipkart might bid for Freecharge as an agreement in order to complete the acquisition process. The rumoured sale price of Freecharge stands in between ₹250 Crores to ₹420 Crores ($40 Million to $65 Million), way below the price of ₹2500 Crores ($400 million) at which, the online recharge website was acquired by SnapDeal in 2015.

The buyout of FreeCharge has been getting a lot of buzz lately. Because of the fact that whoever buys, will get Softbank as a backer and companies do not want to miss out on that. Last week, there was a report which suggested PayTM buying FreeCharge along with a $1 Billion investment from Softbank. There are also reports that PayPal and PayU, two of the biggest payment solution providers globally, might even look to bid for FreeCharge.

The approval of Kaalari Capital to the proposed deal, seems the green signal for the deal to go through. Provided, Softbank is successful in convincing Nexus as well. Both these investors hold around 18% of equity in Snapdeal and for sure, that will play a big part as and when the deal happens.

About the author

Kunwar Prithvi Singh Chauhan

Part time journalist, full-time observer. Editor-in-Chief at The Indian Wire. I cover updates related to business and startups.

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