Snapdeal, the India-based e-commerce marketplace that counts corporates SoftBank, Foxconn, Alibaba, Myriad, Bennett Coleman & Co, eBay and Intel as investors, has bounced back from hard times to file for an initial public offering.
The company is targeting Rs 12.5bn ($166m) through the sale of new shares while shareholders including telecommunications and internet group SoftBank, contract manufacturer Foxconn and Sequoia Capital India plan to sell some 30.8 million shares.
Founded in 2010, Snapdeal was at one point the biggest rival for Indian market leader Flipkart in the e-commerce space, but was unable to reach profitability, particularly when foreign competitors began entering the country.
SoftBank had invested a total of about $900m in Snapdeal as of early 2017 and held a stake sized at over 30%, but decided in April that year to withdraw an amount reported to be between $150m and $200m in debt financing pledged to the company in a bid to spur a merger with Flipkart.
Flipkart reportedly offered between $900m and $950m to buy Snapdeal – valued at up to $7bn the previous year – only to see the bid rejected in July. SoftBank subsequently invested $2.5bn in Flipkart the following month.
Snapdeal subsequently managed to become cashflow positive in 2018 and although it has not approached its peak valuation since, it has managed to carve out a place in India’s e-commerce market by concentrating on smaller towns and cities, which are now responsible for some 70% of its orders.
The company recorded approximately $32m in revenue for the six months ending September 2021, according to the IPO filing. It has raised a total of some $1.7bn in funding from investors also including Kalaari Capital, Nexus Venture Partners, BlackRock, Temasek, Ru-Net, Saama Capital, Bessemer Venture Partners, Ontario Teachers’ Pension Plan, Iron Pillar and Brother Fortune Apparel.
Although the prospective offering would potentially represent a triumph for Snapdeal’s founders, it could also be a bellwether for India’s fluctuating public markets space.
CE Info Systems, the owner of digital mapping product, MapmyIndia floated on Monday at a 54% premium to its IPO price, boosting its market capitalisation to over $1.1bn.
Some of the country’s most prominent tech companies, including food ordering service Zomato, fashion and beauty product marketplace Nykaa and financial product comparison service Policybazaar, have also launched successful IPOs this year.
However, investors are still wary following the November flotation of One97 Communications, owner of digital payment technology provider Paytm, which raised almost $2.5bn in its IPO, only to see its share price plummet 40% on its first day of trading.
Today, One97’s shares are sitting at Rs 1,348 each, still more than 35% down from its IPO price. Snapdeal’s revenue has declined in recent quarters and it will be hoping the tailwinds from the rest of India’s tech space can keep its share price steady, but those financials would indicate a dip in price is somewhat probable.
