Mobikwik emerges as frontrunner to acquire FreeCharge; merger would mark Softbank’s exit from Snapdeal

Japanese investor Softbank is in the thick of orchestrating merger and investments deals in India. IOS reported how the firm is working on three deals simultaneously. Add fourth one to the list – Freecharge sales deal.

Mobikwik is most likely to acquire Freecharge

It’s known to everyone that the payments arm of Snapdeal is up for sale as well. Many companies were in the line to acquire FreeCharge such as Flipkart, PayPal, and Paytm.

But according to news reports, Mobikwik would be the one that would grab Snapdeal’s payment vertical. Nothing has been confirmed as yet. But word is out that PayPal is out of the running and Mobikwik is close to sealing the deal.

If the digital payments firms do merge, then both would gain from it. And Paytm, the current leader of the digital payments industry, would gain a strong rival.

At present Mobikwik has over 50 million customers and 1.4 million merchants listed on its website. After acquiring Freecharge, the company would also get access to 20 million customers and 1 million+ merchants including IRCTC, Uber, Meru, Amul, Bookmyshow, and Big Basket.

Freecharge- from biggest acquisition to liability

Snapdeal-Freecharge acquisition deal was one of the biggest newsmakers in 2015. Post that, the online marketplace invested heavily in the payments arm with an intention to edge out its rivals Flipkart, Amazon and Paytm.

Within 6 months of the acquisition, Snapdeal launched Freecharge Digital Wallet. The etailer dreamed of making its e-wallet the Operating System of digital payments. The year 2016 witnessed many Freecharge developments.

A year later things look drastically different. Snapdeal failed to utilise the advantage it had gained and the losses kept piling up. Therefore in 2017, Snapdeal investors are busy making business proposals to sell the marketplace and its prized possession Freecharge. The sale of both these business units would mark Softbank’s exit from Snapdeal.

Softbank plans to exit Flipkart in future?

Sale of Snapdeal and Freecharge would result in Softbank’s exit from the company but not from India. The investor plans to grab a big slice of the Indian ecommerce pie, even if it means obtaining it in bits and pieces.

The Japanese investment firm has eyes set on Flipkart and Paytm along with other firms within and outside the ecommerce industry. Although, industry watchers believe that Softbank would exit from one of the ecommerce biggies in the future.

An industry analyst asserted, “By hedging its bets in Paytm and Flipkart, Softbank is trying to ensure that it is able to exit from one of these investments at a later stage at a premium. Since Paytm is backed by Alibaba, which is Softbank’s crown jewel, it is more likely to exit Flipkart when it goes in for an IPO.”

Softbank is playing really smart. But what would the future look like Snapdeal and Freecharge?