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Axis Bank, India’s third-largest private sector lender, has emerged the frontrunner to acquire FreeCharge, the digital payments platform owned by troubled ecommerce marketplace Snapdeal, according to three people aware of the development.
The payments unit has been seeking a buyer for several months now, even as its parent negotiates the terms for its own sale.
Mumbai-headquartered Axis Bank is currently conducting due diligence on FreeCharge, according to the three sources cited above, who estimate that a potential deal could deliver a payout of up to $100 million to cash-starved Snapdeal.
This, however, could not be independently verified by ET. Axis Bank and Snapdeal did not reply to emailed queries.
In May, ET had reported that two domestic banks and a couple of private equity firms had expressed interest in Bengaluru-based Free-Charge, once described as Snapdeal’s crown jewel by its chief executive Kunal Bahl.
FreeCharge was acquired by Jasper in 2015 in a cash-and-stock deal estimated at $400-450 million in what was then the largest acquisition in the Indian startup landscape.
Last month, market leader and rival Paytm had signed a non-exclusive term sheet while making a bid of $10-15 million for FreeCharge, according to two sources familiar with the matter.
The surprise emergence of Axis Bank as a potential buyer indicates that Jasper Infotech — the holding company of Snapdeal — had been hawking FreeCharge to others as well, sources said.
Shares of Axis Bank closed down 1.25% at Rs 503.30 on the BSE on Friday. The sale of FreeCharge and logistics unit Vulcan Express would provide much-needed relief to Jasper’s balance sheet. The embattled Gurgaon-based company is separately negotiating the sale of Snapdeal to rival Flipkart.
At one point, Jasper was eyeing a valuation of close to $1 billion for Free-Charge, as it tried to raise cash for the unit, a process that began in late 2015. The reversal in the fortunes of Snapdeal had a drastic effect on Free-Charge, which saw the volume and value of transactions fall sharply.
The company is estimated to have recorded Rs 300 crore in transaction revenue on about 12 million transactions in April.
In its heyday, the payments company had forecast 7 million daily transactions and gross merchandise transactions of Rs 20,000 crore by the end of fiscal 2017.
Over the past six months, Jasper has pumped more than Rs 440 crore into FreeCharge, according to documents filed with the registrar of companies. The latest development comes days after the Jasper board rejected an initial offer of $800-$900 million for Snapdeal from Flipkart.
Source : Economic Times
The payments unit has been seeking a buyer for several months now, even as its parent negotiates the terms for its own sale.
Mumbai-headquartered Axis Bank is currently conducting due diligence on FreeCharge, according to the three sources cited above, who estimate that a potential deal could deliver a payout of up to $100 million to cash-starved Snapdeal.
This, however, could not be independently verified by ET. Axis Bank and Snapdeal did not reply to emailed queries.
In May, ET had reported that two domestic banks and a couple of private equity firms had expressed interest in Bengaluru-based Free-Charge, once described as Snapdeal’s crown jewel by its chief executive Kunal Bahl.
FreeCharge was acquired by Jasper in 2015 in a cash-and-stock deal estimated at $400-450 million in what was then the largest acquisition in the Indian startup landscape.
Last month, market leader and rival Paytm had signed a non-exclusive term sheet while making a bid of $10-15 million for FreeCharge, according to two sources familiar with the matter.
The surprise emergence of Axis Bank as a potential buyer indicates that Jasper Infotech — the holding company of Snapdeal — had been hawking FreeCharge to others as well, sources said.
Shares of Axis Bank closed down 1.25% at Rs 503.30 on the BSE on Friday. The sale of FreeCharge and logistics unit Vulcan Express would provide much-needed relief to Jasper’s balance sheet. The embattled Gurgaon-based company is separately negotiating the sale of Snapdeal to rival Flipkart.
At one point, Jasper was eyeing a valuation of close to $1 billion for Free-Charge, as it tried to raise cash for the unit, a process that began in late 2015. The reversal in the fortunes of Snapdeal had a drastic effect on Free-Charge, which saw the volume and value of transactions fall sharply.
The company is estimated to have recorded Rs 300 crore in transaction revenue on about 12 million transactions in April.
In its heyday, the payments company had forecast 7 million daily transactions and gross merchandise transactions of Rs 20,000 crore by the end of fiscal 2017.
Over the past six months, Jasper has pumped more than Rs 440 crore into FreeCharge, according to documents filed with the registrar of companies. The latest development comes days after the Jasper board rejected an initial offer of $800-$900 million for Snapdeal from Flipkart.
Source : Economic Times
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