Snapdeal risks valuation markdown to raise fresh funds

By

Maverick Martins

Published
Jan 25, 2017

Indian e-commerce major Snapdeal is risking a valuation markdown to raise fresh funds from existing investor SoftBank Group Corp.

Snapdeal and SoftBank have discussed a valuation range of $3-4 billion significantly lower than the $6.5 billion peak it touched in its previous round, people familiar with the matter told the Mint.

If the deal is sealed, it will be the first time Snapdeal’s valuation will take a hit. In 2016
While 2016 saw several investors mark down industry leader Flipkart’s valuation by as much as 40%, one of Snapdeal’s mutual fund investors, BlackRock Inc, has maintained its valuation estimate of the online marketplace.

The online marketplace is however trying to attract new investors at a higher valuation, the people mentioned above said on condition of anonymity.

“We are well capitalized and we are not engaged in any active financing discussions,” said a Snapdeal spokesperson.

Gurgaon-based Snapdeal has lost significant market share to rivals Flipkart and Amazon in the last 12-18 months, slipping to a distant No 3 position.

Cost-cutting efforts undertaken in 2016 have resulted in a lower cash-burn rate as the company looks to focus on profitability, not market share.

Snapdeal’s loss more than doubled to Rs3,316 crore in the year ended 31 March 2016. Revenue rose 56% to Rs1,457 crore. Revenue growth slowed sharply from the 450% growth Snapdeal reported in the year to March 2015.