Softbank Keen To Exit Snapdeal & Invest $1.5B In Paytm

SoftBank, the largest investor in Snapdeal, is keeping its options open.

According our sources SoftBank, which has been for the last three months trying to lock a deal to sell Snapdeal, is learnt to be in talks with Tiger Global to merge it with Gurgaon-based marketplace with Flipkart.

Tiger Global is a top investor in Flipkart. But people close to the developments said the deal could go either way — Snapdeal getting merged either with Flipkart or Paytm.

Simultaneously, after roping in China’s Alibaba as an investor into its marketplace business unit, India’s leading mobile wallet and payments company Paytm is reportedly in talks to raise over $1 billion from the Japanese investor SoftBank, which is widely believed to be readying for selling its stake in another e-commerce firm Snapdeal.

The deal, if successful, will raise Paytm’s valuation at over $7 billion from $5 billion last year when it raised $60 million from Mediatek, reported citing ‘multiple’ unidentified sources. As part of the deal with Softbank, Paytm may also buy Snapdeal-owned payments firm Freecharge, as per a PTI report. The mobile-wallet-major has a valuation of close to $6 billion and has a user base of over 200 million.

Indian e-commerce space is a buzz with news reports that the largest player Flipkart is considering acquiring Snapdeal, especially since the latter’s largest shareholder Softbank is keen to exit the investment and is expected to make an announcement in the next few weeks.

Earlier last month, Chinese e-commerce giant Alibaba, which was widely tipped to be eyeing an entry into India for a long time, picked up a significant equity stake in the newly-formed marketplace business Paytm, at a time when the incumbents in the country are reeling under operational pressures leading to retrenchments and cut in valuations.

While the Japanese major has been spearheading the talks for a possible merger of Snapdeal with Bengaluru-based Flipkart, sources said it was exploring a similar deal with Paytm.

An all-stock merger of Snapdeal with Paytm is being discussed at the highest level, sources pointed out. This could mean SoftBank investing in the Alibaba-backed wallet company. SoftBank is among the oldest investors in Alibaba. Talks have also been held on the possibility of SoftBank taking equity in Paytm for investments of close to $1 billion.

SoftBank, which has been for the last three months trying to hammer out a deal to sell Snapdeal, is learnt to be in talks with Tiger Global to merge the Gurgaon-based marketplace with Flipkart. Tiger Global is a top investor in Flipkart. But people close to the developments said the deal could go either way — Snapdeal getting merged either with Flipkart or Paytm.

SoftBank, when contacted, refused to comment on the issue. However, a source said digital payment was a lucrative space to be in for the bank. “If SoftBank manages to close the deal with Alibaba, it would get a stake in the country’s largest wallet Paytm.

According to industry insiders, a deal with Paytm makes more sense for Snapdeal as there are synergies between the two ecommerce companies and have Alibaba as a common investor. “They both have a marketplace, a mobile wallet as well as Alibaba as a common investor. For SoftBank, it makes more sense to deal with the Chinese tech major in which it has considerable stake.’’