Softbank-backed Snapdeal has defer red its Rs 1,250-crore initial public offering — joining a bunch of new-age tech companies which have suffered a meltdown in their valuations.
The e-commerce marketplace filed a request with the Securities and Exchange Board of India (Sebi) this week to withdraw its draft red herring prospectus (DRHP).
Snapdeal joins Boat, PharmEasy and Droom, who have put off their IPO plans. It had filed its papers with the market regulator in December 2021, following the public listing of various tech companies such as Zomato, Paytm, Nykaa and Nazara Technologies. However, some of them are now trading at a steep discount to their issue price.
A company spokesperson said that Snapdeal has decided to withdraw DRHP after considering the prevailing market conditions and it may reconsider an IPO in the future, depending on the need for growth capital and market conditions.
Founded by Kunal Bahl and Rohit Bansal in 2010, Snapdeal had planned to use the bulk of the IPO proceeds to fund organic growth. The company says it caters to the so-called value e-commerce segment by selling “value-for-money”, or more affordable products via its shopping website and app.
Valued at $6.5 billion in 2016, Snapdeal has seen its popularity dwindle over the years as competition increased. It has recorded losses in the last three financial years between 2019 and 2021, and was hoping to raise new funds via IPO at a valuation of $1 billion.
In its draft public offering, Snapdeal was aiming for a primary issuance of shares worth Rs 1,250 crore. The company was also looking for an offer-for-sale (OFS) from existing investors of up to 3.07 crore shares.
SoftBank, which owns a 35.67 per cent stake via its affiliate Starfish Pte Ltd, was expected to sell up to 2.4 crore shares, while another shareholder chip maker Foxconn’s affiliate Wonderful Stars Pte Ltd had planned to sell up to 29.7 lakh shares in the company.
Canada’s Ontario Teacher’s Pension Plan Board, Myriad Opportunities Master Fund and Sequoia Capital were also likely to sell their shares.
Snapdeal posted losses in the last three financial years. Its consolidated operating revenues slid 44 per cent to Rs 471.8 crore in 2020-21, while losses less than halved to Rs 125.4 crore. The company is yet to publish its financials for FY22.
At the time of filing the draft paper with the Sebi, market sources had indicated the company is looking at a valuation of over $1.5 to 1.7 billion.
Snapdeal’s founders Kunal Bahl and Rohit Bansal were not selling in the IPO.
