SoftBank logs Rs 9000 cr valuation loss from Ola, Snapdeal

Robyn Ryan
May 13, 2017

Snapdeal's largest stakeholder, SoftBank, is now negotia ting the sale of the compa ny to ri val firm Flipkart.

Locked in an intense battle with Tiger Global-backed Flipkart and American e-tailing giant Amazon, Snapdeal has not been able to match the success of its rivals, slipping to a distant third in the e-commerce market.

Moving further reports also suggests that Paytm is talks with SoftBank to raise up to $1.9 billion in fresh funding that could value it between $8 billion and $9 billion. Paytm striking this deal for Freecharge's acquisition comes at the right time as to avoid it losing the subsidiary to Flipkart if the Snapdeal was sold before.

Nexus and Snapdeal founders have agreed to the terms of payment with SoftBank wherein Snapdeal founders would get $15 million each and Nexus would get $50 million to $60 million, the business channel said on Thursday.

Last month, Flipkart offered $1 billion in stock to buy Snapdeal (excluding FreeCharge).

SoftBank has invested about $1 billion into Snapdeal since 2014, but is facing a fierce competition from U.S. major Amazon which snatched the No.2 spot from Snapdeal. "This situation caused a material decrease in net asset value of Starfish Pte Ltd (holding company of Snapdeal) and, therefore, SBG impaired the carrying amount of its shares in the company, to the amount equivalent to its net asset value", it said in its financial report. Financial instruments at FVTPL (fair value through profit or loss) included preferred shares of Jasper Infotech Private Limited and ANI Technologies Private Limited. Ola raised another $100 million from Ratan Tata's UC RNT Fund and Falcon Edge which saw its valuation inch up to $3.5 billion.

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. On the other hand, Ola, which rivals Uber Technologies Inc, has managed to raise only about $350 million after hitting a fundraising trail in June previous year, with SoftBank alone putting in about $250 million. SoftBank had invested in real estate start-up, too. SoftBank has a joint venture with Bharti for investments in solar energy in India.

Currency fluctuations and market dynamics had also contributed to the loss. "The loss reported in today's (May 10) earnings represents the aggregate impact of such revaluations during the course of the entire fiscal year", said a SoftBank spokesperson.

Other reports by VideoGamingPros

Discuss This Article