Snapdeal, the India-based online retailing giant, is now looking for more investments to increase its capital and finances after non-lucrative talks with Chinese e-commerce giant ‘Alibaba’ and China. Sources familiar with the matter said the Indian e-commerce giant is facing prospects of little interest and declining cash reserves from existing investors, hence, it is seeking funds to hike up its finances.
Snapdeal’s investors showing little interest now
Now, the India-based online retailing giant is facing tough competition from other e-commerce companies like Ebay, Flipkart, Shopclues, Abof, Amazon etc. To keep its stability in the e-commerce market, the online retailer is seeking funds; however, its major investors such as China-based Alibaba Group Holding Ltd, U.S. hedge funds, and Japan-based Softbank are showing very less interest in the company. This news was disclosed by a source who is familiar with the issue but has asked to keep their name anonymous.
The source with direct knowledge of plans of the online retailer said, “Snapdeal has been desperately looking to raise money in China for the last few months.” Further, they said, “It had multiple rounds of talks with some Chinese funds and was also hoping to get some fresh money from Alibaba. But those talks were not going anywhere and Alibaba made it clear to them they would not write a new cheque for them given the dim outlook for making money anytime soon.”
Softbank as well as the Chinese e-commerce giant, which even has a small stake in the Indian online retailer, have refused to comment on the matter. According to sources, the non-lucrative and unsuccessful negotiations of the e-commerce company in China and its dropping valuations may compel the online retailer to consider sale.
Snapdeal could consider an outright sale: Sources
According to another source – also familiar with the matter – “The industry is up for consolidation and Snapdeal maybe the first one to witness it.” Snapdeal, which was founded in 2010, was valued at $6.5 billion after a fund-raising in 2016.
The same source added, “Till what time will Snapdeal continue to survive from savings? … Snapdeal is not pushing for any consolidation but it’s for the investors to take that call. They have an independent way of looking at this.” However, the Indian e-commerce company has denied all these reports and made it clear that it has no intention of selling the company.
Around two weeks ago, a Snapdeal executive said that the board assented a plan to turn profitable. The executive also identified a “small gap in funding.” The efforts of Snapdeal were focused on driving profitability and the company was well capitalized, said a Snapdeal spokeswoman.