SnapDeal has acquired the online recharge platform FreeCharge, making it “one of the largest acquisitions” in the Indian Digital Commerce space. This takeover deal has been estimated for $400 million (Rs. 2,400 crore) SnapDeal acquired the mobile transaction platform in a “Cash and Stock”. It is said to be 30 per cent in cash and 70 per cent in stock. The transaction was done at $ 5 billion valuation for SnapDeal.
“With this game-changing partnership with FreeCharge, we have significantly enhanced our user base and now offer all our customers access to the widest selection of products and services online, making digital commerce an even more intrinsic part of their lives,” said Kunal Bahl, CEO and founder of SnapDeal said.
FreeCharge lets SnapDeal to a much younger audience, while most Snapdeal customers are between the age group 25-30, FreeCharge serves to the age group of 18-25.
The venture, which started in 2010, recharges mobile phone balances and is popular with the youth because the segment allows the youth to buy small pre-paid packages and FreeCharge offers free coupons of various kinds with every recharge, thus making it one of the most lucrative offers to deal with for the consumers.
This is Snapdeal’s fifth acquisition since the last year. SnapDeal has in its kitty a social fashion discovery platform, a gift recommendation site, a luxury e-commerce site and an online financial services platform.
Bahl said Snapdeal’s objective is to add a number of related offerings around its core platform. He has said that this trick is similar to the business model of the Chinese website Alibaba.com, as they have noticed its recharge business T-Mall does $20 billion in the revenue.
Snapdeal, which raised over $1.1 billion last year, is backed by Japanese telecom and internet major SoftBank Corp, which is also a major stakeholder in Alibaba.
FreeCharge will continue to function as an independent platform and all aspects of FreeCharge’s shopping experience will remain intact. The current CEO, Alok Goel will be assigned a separate responsibility in SnapDeal.
Snapdeal, which received USD 627 million funding from Japan’s SoftBank last year, has investors such as Tata Group chairman Emeritus Ratan Tata, eBay, Tybourne, Myriad, Blackrock Inc, Temasek and Premji Invest.
Sequoia, a major investor in FreeCharge, is said to be getting a 3% shareholding in Snapdeal following the deal. FreeCharge’s early employees are said to have made good money from their stock options.
India has more than 300 million internet users today. The Indian e-commerce market is expected to grow to $102 billion by 2020, as reported by an investment survey from Morgan Stanley. SnapDeal, Flipkart and Amazon are in a neck to neck competition with each other for larger shares in the markets, each receiving massive amounts funding. While Flipkart minted close to $2 billion last year, Amazon announced a $2 billion dollar commitment to the expansion of its Indian clan.
Tags: FreeCharge Snapdeal
