Axis Bank, the third largest private sector lender in India, announced that it would purchase FreeCharge from Snapdeal. The announcement came out on last Tuesday.
FreeCharge is a digital payment platform owned and operated by Snapdeal – the Delhi based e-commerce company. Axis Bank closed the deal with Snapdeal at Rs. 385 crores, and it expects that the merger with FreeCharge will help the bank increase its customer base.
The merger will help Axis Bank access 54-million-plus customers of FreeCharge, its human resources, technology and established brand identity.
The bank will consider merging its wallet business with FreeCharge once all legal formalities pertaining to the deal are completed. The regulatory clearance for the deal is likely to be completed in 2 months. The deal is subject to the approval of Reserve Bank of India (RBI).
Commenting on the deal, Jairam Sridharan, the finance chief of Axis Bank said that “Digital payments in India are surging. Government policies are driving a less-cash economy.”
FreeCharge lost its market immediately after demonetization when Paytm took over the market experiencing tremendous growth and popularity.
Axis Bank is hopeful about this new deal and expects that its entry into the mobile wallet segment can add more value to its business, since many banks are yet to explore the mobile wallet segment and have been not successful in catering to the digital needs of customers.
As reported by The Times of India, Amazon also made a higher bid for FreeCharge. But, FreeCharge preferred to be with Axis Bank.
The current transaction of Snapdeal with Axis Bank is expected to offer significant relief to Snapdeal which has been struggling to raise fund and stabilize its business for more than a year.