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Snapdeal files DRHP for IPO to raise Rs 1,250 crore via fresh issue

SoftBank-backed e-commerce startup, Snapdeal has filed its draft red herring prospectus (DRHP) with market regulator SEBI to raise Rs 1,250 crore (~$165 million) through a public issue. The IPO consists of a primary issue of up to Rs 1,250 crore in equity shares and an offer-for-sale (OFS) of up to 30,769,600 equity shares by the company’s existing shareholders.

Snapdeal boxes

Image Source: The Economic Times

SoftBank’s Starfish I Pte Ltd would offload up to 2.4 crore shares under the OFS. Wonderful Stars Pte Ltd and Sequoia Capital India III Ltd have each proposed to sell shares for 29.68 lakh and 4.15 lakh, respectively. Ontario Teachers’ Pension Plan seeks to dispose of 13.6 lakh shares. Kenneth Stuart Glass (748,000 shares), Myriad Opportunities Master Fund Ltd. (649,600), Laurent Amouyal (128,000), and Milestone Trusteeship Services Pvt. Ltd.  (504,000) are the other shareholders participating in the OFS.

While Blackrock, Temasek Holdings, Nexus Venture Partners, eBay, RNT Associates, Premji Invest, Intel Capital, Tybourne, and other major investors will not offload any shares in the IPO. The board of directors and shareholders both approved the offer at their respective meetings on November 28, 2021, and December 5, 2021.

The New Delhi-based e-commerce startup has 71 shareholders with Softbank Group being the largest having 35.41 percent of the company. While Co-founders Kunal Bahl and Rohit Bansal hold 20.28 percent and neither of them are liquidating any of their shares. Snapdeal has appointed Axis Capital Ltd., BofA Securities India ltd., CLSA India Pvt. Ltd, and JM Financial Ltd. as the book running lead managers for the IPO.

The startup plans to use Rs 900 crores from the primary issue of Rs 1,250 crores to facilitate organic growth, which would include investing in marketing and promotions as well as strengthening its technology infrastructure, both of which are believed to be primary factors in accomplishing these goals.

Snapdeal is also considering raising an additional Rs 250 crore in a pre-IPO funding round through private placement, which would decrease the size of the IPO. Unicommerce, the company’s profitable arm, recently received funding from Softbank Group in a private placement round, with the latter acquiring roughly 30 percent of the subsidiary.

Snapdeal, founded in 2010, formerly competed in the expanding India market with Amazon. and Walmart owned Flipkart but fell behind as its deep-pocketed rivals invested aggressively to capture a dominant market position. In the fiscal year ending March 2021, revenue from operations plunged 44 percent to Rs 471.75 crore, while the loss shrunk by more than half to Rs 1,211.02 crore.

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