SoftBank opts out of Snapdeal funding deal
NEW DELHI: Japanese investor SoftBank has abruptly rescinded a $150-200 million debt financing it had offered to Snapdeal-owner Jasper Infotech, escalating a boardroom battle involving the online marketplace’s new and old investors, according to multiple people aware of the developments.
Lines are being drawn across the seven-member board, with Soft-Bank, the largest stakeholder in Snapdeal, squaring off against two of Snapdeal’s early backers — Kalaari Capital and Nexus Venture Partners.
“Both Kalaari Capital and Nexus Venture Partners are livid at the developments, and have questioned SoftBank about its intention with regard to Snapdeal,” one of the people cited above said.
“There was a term-sheet offering Snapdeal debt financing for a period of three years, which was, inexplicably, withdrawn within days, giving credence that Soft-Bank has made up its mind about selling the company,” a second person said.
Apart from SoftBank, which has two seats at the table, and Kalaari and Nexus, which have one each, Jasper’s board includes cofounders Kunal Bahl and Rohit Bansal, and Bharti Enterprises vice-chairman Akhil Gupta as an independent director.
The latest sequence of events took place barely three weeks ago. SoftBank declined to comment on the developments, while Jasper Infotech, Nexus Venture Partners and Kalaari Capital did not reply to emails from ET.
According to the people cited above, SoftBank has led all discussions relating to a potential sale or merger involving Snapdeal, with no other stakeholder involved. “SoftBank has been solely fronting all the (sale) conversations till date. The other board members have been pretty much kept out of the loop thus far,” one of the people cited above said.
The rising differences between Jasper’s largest stakeholder, which has pumped in about $900 million in the company, and its early investors were first reported by Mint in its March 31edition.
NOT THE FIRST INSTANCE
This is not the first time that Jasper’s board members, particularly SoftBank, Kalaari Capital and Nexus Venture Partners, have crossed swords.
In December, SoftBank had offered a direct $50-million monthly injection in Snapdeal, contingent on a potential merger or sale of the company. Kalaari and Nexus Venture Partners disagreed with the terms, asking the Tokyo-headquartered investor to instead guarantee the funding.
That offer was also taken off the table. SoftBank’s stake in Jasper stood at about 33% while Kalaari Capital and Nexus Venture Partners owned about 8% and 10%, respectively. Both the founders, combined, owned about 6.5% of the company, which at its peak early last year was valued at about $6.5 billion.
Kalaari, which has invested about $27.5 million in Jasper, earned handsome returns estimated at about $100 million when it sold a portion of its stake to Soft-Bank in late 2014.
Nexus Venture Partners, which has invested $40-50 million in the company, has not sold any of its stake. A sale of Snapdeal, if successful, would have huge ramifications on not just the Indian startup ecosystem but also on the country’s consumer internet sector. Snapdeal, which along with Flipkart, has played a critical role in shaping the ecosystem, is still regarded as the third-largest ecommerce company in the country in spite of dwindling sales.
SoftBank has reached out to Flipkart to sell Snapdeal. The potential contours of that deal could see SoftBank pick up a 20% stake in the country’s largest commerce company for about $1.5 billion, in the process buying out $1 billion worth of Tiger Global’s holding in Flipkart, according to two people aware of the matter.
Governance rights for Soft-Bank have also been discussed as part of the deal, one of them said.