Snapdeal, as we reported earlier, is in a pretty tight spot over its investors feud. According to several reports now, the boardroom battle has now escalated even more and it is reported that SoftBank has abruptly canceled its $150-200 million debt financing offer.
According to a report from Economic Times, lines are being drawn across the seven-member board. SoftBank being the largest stakeholder in Snapdeal, is squaring off against two of Snapdeal’s early backers—Kalaari Capital and Nexus Venture Partners.
A person aware of the matter said that both Kalaari Capital and Nexus Venture Partners are livid at the developments, and have questioned SoftBank about its intention with regard to Snapdeal.
A source further revealed that:
There was a term-sheet offering Snapdeal debt financing for a period of three years, which was, inexplicably, withdrawn within days, giving credence that SoftBank has made up its mind about selling the company.
On Snapdeal’s board, SoftBank has two seats at the table, and Kalaari and Nexus, have one each. Jasper’s board also includes co-founders Kunal Bahl and Rohit Bansal, and Bharti Enterprises vice-chairman Akhil Gupta as an independent director.
If the new funding is not coming to the company, the only way forward for the company seems to get acquired by a bigger player. In face, SoftBank is said to be leading discussions of a potential sale of merger with Flipkart and Paytm. Sources reveals that no other stakeholder is involved in such talks.
SoftBank has been solely fronting all the (sale) conversations till date. The other board members have been pretty much kept out of the loop thus far.
This isn’t the first time that Jasper’s board members, particularly SoftBank, Kalaari Capital and Nexus Venture Partners, have crossed swords. In December, SoftBank had offered a direct $50 million monthly injection in Snapdeal, contingent on a potential merger or sale of the company. Kalaari and Nexus Venture Partners disagreed with the terms, asking to instead guarantee the funding. That offer was also taken off the table.
SoftBank’s stake in Jasper stood at about 33%, while Kalaari Capital and Nexus Venture Partners owned about 8% and 10%, respectively. Both the founders, combined, owned about 6.5% of the company. At the time of its previous funding round, the company was valued at $6.5 billion — its peak valuation so far.
Despite dwindling sales, Snapdeal is considered to be the third largest e-commerce platform in India. If Snapdeal’s sale becomes successful, it would have huge ramifications, and not just in the Indian startup ecosystem but also on the country’s consumer internet sector.
Reports also suggested that the company is looking forward to launch an IPO in the second half of 2019. However, without the much required funding round, the IPO will not materialise – and the only way out would be a sale or merger.