PremjiInvest, the investment office of Wipro chairman Azim Premji, owns a minority share in struggling homegrown e-commerce firm Snapdeal. As reports suggest, it has today again written a letter to the e-commerce company, seeking more clarification about the terms of its acquisition.
Snapdeal, founded in 2010, is reportedly merging its business with Flipkart for about $1 billion — a major drop in the valuation as the company was last valued at $6.5 billion.
We earlier reported that Snapdeal has agreed to sign a binding Letter of Intent (LoI) for the merger.
This is the second time PremjiInvest has written a letter to the company for clarification. Earlier, Azim Premji and Ratan Tata had sought clarification over the deal.
While most investors agreed to the acquisition terms, several important investors didn’t, including the family offices of Azim Premji and Ratan Tata, the former chairman of Tata Group. It is not yet known if they have now come through or not.
As per sources privy to the developments, the letter primarily questions how the rights of minority shareholders will be protected in the event of the sale being finalized.
Another person aware of the matter says that PremjiInvest is also building consensus among other investors, who hold small stakes in Snapdeal, including Singapore’s sovereign wealth fund Temasek and asset manager BlackRock, to potentially oppose special payouts to certain shareholders.
Such payments are expected to be made to early investors such as Nexus Venture Partners and Kalaari Capital, besides company founders Kunal Bahl and Rohit Bansal.
In the letter, which has been sent to the Jasper Infotech board, PremjiInvest outlines its concerns over the transaction, which aims to close the sale of Snapdeal to its Bengaluru-headquartered rival for $700 million – $1 billion.
The deal is currently in the due-diligence phase. While SoftBank was earlier expecting the transaction to close by June, it is likely to get delayed at least another month.
SoftBank, which currently holds over 33 percent in Snapdeal, is also in talks to invest in Flipkart as part of the proposed merger. If you’re aloof, apart from PremjiInvest, Snapdeal counts investors such as Ratan Tata, Foxconn, Alibaba Group, Ontario Teachers’ Pension Plan, eBay and Hong Kong-based hedge funds, among others, who together own about 40% of the company, but do not have board representation.
