Snapdeal, one of the largest ecommerce marketplaces in India, has raised $500 million (€450 million) from investors led by China’s Alibaba, Taiwan’s Foxconn, and Japan’s SoftBank, as it steps up its expansion.
The fundraising round has valued Snapdeal, which was founded in 2010 by Kunal Bahl – an ardent Alibaba admirer, who describes his company as an Indian version of the Chinese online behemoth – at roughly $5 billion, people familiar with the transaction say.
Mr Bahl said the fundraising was “a significant endorsement of Snapdeal’s strategy”.
As a secondary part of the transaction, eBay, one of Snapdeal's earliest foreign investors, has sold down part of its holding in the group. The US company said, however, it would retain a "significant portion" of its original investment and would plough the profits from the sale into its own business, including its India platform, which lags behind rivals.
Snapdeal has been vying for dominance of India's fast-growing ecommerce market against local rival Flipkart, which was valued at $11 billion in its latest fundraising round, and Amazon, which is investing $2 billion in India. According to the company, 150,000 vendors sell more than 12 million products on its site.
Ecommerce is gaining rapid traction with India’s young, tech-savvy, time-pressed population, enabled by the rapid proliferation of low-cost smartphone handsets, while its traditional retail industry has been stunted due to lack of suitable real estate and logistical constraints.
India’s etail market is worth $2.3 billion in annual sales, or just 0.4 per cent of total retail sales, according to Technopak, a consultancy, but this is forecast to rise to roughly $31 billion by 2020.
In addition to its large general marketplace site, Snapdeal is developing several niche sites, including Exclusively, a luxury goods portal, and others offering services, such as RupeePower, a financial services platform. It also acquired FreeCharge, a mobile transactions platform, in April for $400 million.
“This investment in Snapdeal enhances our exposure to India’s burgeoning ecommerce industry,” said Alibaba. “Snapdeal has a strong presence in mobile commerce and it fits our strategy of investing in innovative companies that are transforming the way people transact.”
– (Copyright The Financial Times Limited 2015)
