Nexus stays firm as SoftBank fails to convince investor on Snapdeal sale

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SoftBank’s dream to sell Snapdeal to Flipkart might take longer to materialise, with it failing to convince Nexus Venture Partners after a three-hour meeting on Tuesday. According to insiders, Nexus isn’t happy with the current valuation of $1 billion for the deal, with it looking at double this amount to give its consent.

Snapdeal-sale-to-Flipkart
Nexus Venture Partners is unhappy with the $1 billion valuation of Snapdeal, aiming to receive a higher payout from the deal.

Nexus is one of the early investors in Snapdeal, having invested in the eCommerce giant as early as 2011. It invested multiple times over the next three years, picking up a stake of 10 per cent in the entity at a cost of roughly Rs.210 crore.

Investor Stake
SoftBank 33%
Nexus Venture Partners 10%
Kalaari Capital 8%
Kunal Bahl 6.5%
Rohit Bansal 6.5%

 

The current $1 billion valuation of Snapdeal will give it around Rs.650 crore. A stake swap in the combined entity would leave Nexus with just 1 per cent share in the new entity.

Snapdeal founders Kunal Bahl and Rohit Bansal have, according to sources agreed to the deal. Their payout is expected to be anywhere between $30 and $40 million (Rs.200 crore to Rs.260 crore), subject to the deal going through.

While SoftBank has managed to get Kalaari Capital, which owns an 8 per cent stake in Snapdeal on board, it still needs the consent of Nexus. SoftBank has a 33 per cent stake in the ecommerce giant, which had a peak valuation of $6.5 billion in February 2016.

Flipkart, which recently raised $1.4 billion has exhibited interest to buy Snapdeal, with Paytm showing keen interest to purchase FreeCharge, the online wallet business owned by the parent company of Snapdeal.

SoftBank officials were keen to complete internal formalities in the meeting, aiming to keep the sale proposal before the Flipkart board later this month.

The deal, if it receives the nod of Nexus, will give Flipkart the edge over rival Amazon, which has been ramping up its investment in India.

Read more: Flipkart-Snapdeal – Kalaari Capital agrees for sale

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