Kalaari Capital, the venture capital and investor in Snapdeal, held talk with the company’s promoters about selling part or the totality of its stake in the e-commerce on the online market.
According to anonymous sources, the discussions are still at an early stage and there are yet no guarantee that the request will be granted.
However, the sources did mention that the venture capital firm is well capable of selling its stakes in Snapdeal for Rs 40- Rs 50 crore. The sum is a very small fraction of the total sum the company invested in the company, about Rs 135 crore. It is also being reported that Kalaari Capital are holding talks with other investors to buy out their stake in the company. This desperate move signals that all is not well for the e-commerce business.
Snapdeal already had a bad year 2017 after investors reportedly tried to sell the company to archrivals Flipkart for $850 million. Kalaari Capital and Nexus Venture insisted on an estimated $90 million in return to agreeing to the deal. Those terms were reportedly a turn off for the smooth conclusion of the deal. Finally, the deal fell through and founders Kunal Bahal and Rohit Bansal were able to tighten their hold and recover some control over their own company.
Investors like the SoftBank Group Corp and Kalaari Capital must have been most displeased after the Snapdeal acquisition by larger company Flipkart collapsed. Vani Kola, Managing Director of Kalaari Capital and former board member of Snapdeal, did express his discontent, back in May last year, with the Snapdeal founders’ decision to cancel the deal and go ahead with their individual ambition.
“I am extremely disappointed and shocked with the founders and their disregard for investors’ and employees’ interest” Mrs Kola was quoted saying back then.
Kalaari Capital held about 8% stake in Snapdeal while co-founders jointly held around 7.3% of the company.
Since the deal fell through, Snapdeal redesigned its business model to a pure marketplace model, branded as Snapdeal 2.0 and mimicking Alibaba Group’s Taobao platform. This model focuses on non-branded articles from fewer categories and competing with Shopclues instead of Flipkart or Amazon.
Jasper Infotech, owner and operator of Snapdeal, revealed that the e-commerce ex-giant suffered a 38% drop in revenue for the financial year ended 31 March, 2017. The figures revealed revenues at Rs 903.8 Crore while the figures struck at Rs 1,457 crore the year before.