According to the source, Private sector lender Axis Bank is believed to have finalized a deal to buy Freecharge from Snapdeal for around $60 Million (around Rs 350-400 crore). The deal will give the cash starved company a much needed financial reprieve until it finalizes a sale of its online marketplace to larger rival Flipkart.
This deal between Freecharge and Axis will be the country’s third largest private sector lender has been fixed at between $50 million and $70 million. The Kunal Bahl and Rohit Bansal led e-commerce firm bought Freecharge in April 2015, for an estimated $400 million. At that time, it was touted as the largest buyout in the Indian startup ecosystem.
They were many other contenders for buying out Freecharge. After the news of the proposed Flipkart-Snapdeal merger was first made public in March 2017, FreeCharge started actively seeking out buyers. In May 2017, Jasper Infotech was reportedly looking to sell FreeCharge to Bank of Baroda and Times Internet for $60 Mn-$75 Mn.
Freecharge rivals, Paytm and Mobikwik were also in the race of acquisition of the online payment portal. Other than that, E-commerce Giant Amazon also tried their luck in the acquisition, where they agree to pay $70-$80 Million for the deal.
However, Axis Bank and Jasper Infotech did not reply to email queries. Separately, Sidharth Shankar, a partner at law firm J Sagar Associates, the legal counsel for Jasper Infotech, also declined to comment, stating that he was not authorized to speak on the matter.
Freecharge was founded in 2010 by Kunal Shah and Sandeep Tandon, later in April 2015, it was acquired by Snapdeal for a whopping $450 million. FreeCharge was clocking about 1-1.5 million transactions daily before demonetization kicked in last year only second to Paytm. It is currently valued at less than 80% of that amount. The payments provider recently also received an investment of $3.38 million from its parent Jasper Infotech itself.
The sale of Snapdeal is expected to include a cumulative special payout of about $90 million to venture capital firms, Kalaari Capital and Nexus Venture Partners, two early backers of Snapdeal, who hold about 18%-19% of the company, along with powerful veto rights under the shareholder’s agreement.
Axis Bank had, yesterday, reported a 16 per cent year-on-year decline in its June 2017 quarter net profit at Rs. 1,306 Crores. However, the lender said it expects better days ahead as nonperforming assets have peaked. Read more about Indian Startup Ecosystem.