E-commerce platform Snapdeal has filed preliminary documents with markets regulator Sebi to raise funds through an initial public offer (IPO), joining the league of internet-led businesses looking to list on domestic stock exchanges.
The public issue comprises fresh issuance of equity shares worth Rs 1,250 crore and an offer for sale (OFS) of 3.07 crore equity shares, according to the draft red herring prospectus (DRHP). According to market sources, potential listing could value Snapdeal at about USD 1.5-1.7 billion. Snapdeal’s founders Kunal Bahl and Rohit Bansal are not selling any of their holding in the IPO.
Those selling shares in the OFS are Starfish I Pte, Wonderful Stars, Sequoia Capital, Kenneth Stuart Glass, Myriad Opportunities Master Fund, Ontario Teacher’s Pension Plan Board, Laurent Amouyal and Milestone Trusteeship Services. Proceeds from fresh issue would be used towards funding organic growth initiatives, expanding logistics capabilities, and enhancing the company’s tech infrastructure. Axis Capital, BofA Securities India, CLSA India and JM Financial are the book running lead managers to the issue.
A stellar response to Zomato’s IPO, and a profitable listing in July has prompted a number of internet-led businesses to make a beeline for this route. Since then a number of internet-led businesses, including Nykaa, Paytm and PolicyBazaar got listed on the exchanges too. However, Paytm — one of the most awaited IPOs — witnessed lacklustre listing. Snapdeal is an e-commerce company, and focuses exclusively on the value segment, with more than 90 per cent of the products sold on the platform priced below Rs 1,000 and more than 80 per cent of its users residing beyond the metro cities.
Once a leading player in the Indian e-commerce space, Snapdeal has seen its fortunes falling amid strong competition from rivals Amazon and Flipkart. In 2017, Snapdeal walked away from a potential merger deal with Flipkart and instead pursued what it called the ”Snapdeal 2.0” strategy to become “financially self-sustainable”. The company, which is backed by Softbank, BlackRock Inc, Temasek Holdings Pte and eBay Inc, has been investing in video, vernacular and other strategic projects, aimed at growing the online market among new users, especially those coming in from tier II cities and beyond.
The company’s Power Brands, UniMove logistics platform, multi-lingual user support and its discovery-based shopping approach that replicates the offline journey of buyers are some of the capabilities built by it as part of its Bharat-focused strategy. As part of its expansion plans, Snapdeal plans to expand into omni-channel distribution through partner-driven offline stores. The offline channels accounted for 92 per cent of all sales in the value lifestyle retail market, as of the financial year 2021.