Monday 3 July 2017

Ecommerce investments: Snapdeal due diligence by Flipkart completed; Investors pour money into fintech firms
Last week IOS reported how the due diligence process is obstructing Snapdeal-Flipkart merger and not the minor stakeholders. The process was underway to determine Snapdeal’sfinancial worth and also scan its documents & investments.

Snapdeal to merge with Flipkart by next week?

As per latest news reports, ecommerce leader Flipkart has finally completed Snapdeal’s due diligence. And the results came out clean. This means that the final offer would be soon presented in front of the Kunal Bahl-led company. A person close to the development revealed that the deal might get closed by next week.
The exclusivity deal that Snapdeal has signed with Flipkart ends in a week. If an offer is not made by that period, then other parties could also join the race of acquiring Snapdeal.
“We are hoping that the deal gets closed by next week… The exclusivity clause ends next week. If they do not come back with an offer (before that), SoftBank, as well as other investors, can either extend the timeline or it can be open season,” a source disclosed.
In their unofficial offer, Flipkart had valued Snapdeal at $1 billion. The number could go up or down as per the findings of due diligence report.

Meanwhile, Indian ecommerce industry is cash-rich again

If and when the Snapdeal-Flipkart merger happens, it would be one of the biggest consolidations in the history of Indian ecommerce industry. It would also bring in a lot of cash and changes along with it.
This brings us to the fact that the ecommerce funding scene has gotten off to a great start in 2017. The funding gate opened after a long hiatus, soon after Flipkart grabbed $1.4 billion and eBay India. Many start-ups were happy that investments would come back as a result of Flipkart’s funding.
The expectations turned out to be true as the Indian ecommerce industry has received approximately $4 billion in the first six months of 2017. In the 2016 for the same period, the figure was a mere $1.6 billion.
A major chunk (70%) of this investment went into fin-tech companies’ pockets. Investors generously poured money into taxi-aggregator Ola and digital payments firm Paytm. Amazon Pay and Freecharge too received a sizeable amount from their respective parent companies. So the investments are coming in, but not necessarily in the direction of online retail and marketplaces. The money is flowing towards financial technology companies as it has great potential.
As far as etailers are concerned, money would come along with mergers. Besides Flipkart-Snapdeal, another big deal waiting on the horizon is ecommerce biggie Amazon and online grocery player Big Basket’s merger.

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