Potential Flipkart-Snapdeal Merger Gets Nod From Reluctant Investor

TOKYO-SoftBank Group Corp. said Wednesday that it took a loss of $1.4 billion on investments in its most recent fiscal year, largely from its high-profile stakes in Indian online marketplace Snapdeal and taxi-hailing app Ola.

SoftBank is now negotiating a sale of Snapdeal to India's largest online retailer Flipkart valuing it at $1 billion.

SoftBank is also the biggest investor in local ride-sharing platform Ola that's has an intense and ongoing battle with the United States tech major Uber. Ltd, and Grofers have initiated talks for a merger that, if consummated, could also see SoftBank Group, an existing investor in the latter, participate in a $60-100 million funding round in the merged entity.

Starfish I Pte Ltd is an intermediate holding company, which owns preferred shares in Jasper Infotech Private Limited.

"Highly competitive e-commerce market in India has made a trend of the company's business performance lower than initially anticipated". Snapdeal is going through a tough time, with reports of its imminent acquisition by Flipkart and investor SoftBank writing down its investment in the e-commerce company.

The company had previously written down as much as 58.1 billion yen ($555 million) in the same companies for the six-month period ending September 30, 2016.

"This (SBG's loss at FVTPL) mainly resulted from recording a loss as the amount of changes in the fair value of the financial instruments at FVTPL from March 31, 2016 to March 31, 2017", SoftBank said.

In April it was reported that Snapdeal's three biggest investors - Japan's SoftBank, Kalaari Capital and Nexus Venture Partners have moved closer to resolving an impasse, potentially clearing the way for a sale of the e-tailer to one of its rivals, Flipkart.

The multinational corporation with a focus on telecommunication and e-commerce said in its annual report that expenses of $77.63 million had arisen from the resignation of Nikesh Arora from his position as director. Even if sold at the upper end of the range, it will be a steep fall in valuation for the company, which had seen layoffs of about 100 employees across the board, and for which its founders, till late previous year, had demanded a valuation of close to $1billion. Reports in the media indicate that the merger could happen as early as next week.

  • Zachary Reyes