E-commerce platform Snapdeal on Tuesday filed a draft red herring prospectus with the Securities and Exchange Board of India (Sebi) for an initial public offering (IPO).
The sale by the SoftBank-backed entity comprises fresh issuance of equity shares worth Rs 1,250 crore and an offer for sale (OFS) of 3.07 crore equity shares, according to the draft red herring prospectus (DRHP).
Snapdeal follows other internet-led businesses such as Zomato, Nykaa, Paytm and PolicyBazaar that have tapped the markets through IPO.
Snapdeal’s founders Kunal Bahl and Rohit Bansal are not selling any of their holding through OFS. The selling shareholders include Starfish I Pte (a SoftBank holding firm), Wonderful Stars (a Foxconn affiliate), Sequoia Capital, Kenneth Stuart Glass, Myriad Opportunities Master Fund, Ontario Teacher's Pension Plan Board, Laurent Amouyal and Milestone Trusteeship Services.
SoftBank at present holds around 35.41 per cent in Snapdeal while Bahl and Bansal have shareholdings of 4.56 per cent and 2.94 per cent, respectively.
Snapdeal said that proceeds from the fresh issue would be used towards funding organic growth initiatives, expanding logistics capabilities and enhancing the company's tech infrastructure. It disclosed that of this amount, around Rs 900 crore will be utilised towards fulfiling its organic growth plans.
The company has been positioning as a pure-play value ecommerce application, amid tough competition from majors such as Amazon, Walmart-owned Flipkart and Reliance.
Snapdeal said it was targeting value buyers who belong to the mid-income segment and are predominantly located in the smaller cities. According to RedSeer, this segment forms the majority of the untapped value e-commerce buyers.
Snapdeal posted revenues of Rs 238.58 crore for the quarter ended September 30. Revenues during the year ended March 31, 2021 declined to
Rs 472 crore from Rs 847 crore in the preceding fiscal. It posted a pre-tax loss of Rs 124.54 crore in 2020-21, lower than Rs 273.54 crore in the previous year.
Axis Capital, BofA Securities India, CLSA India and JM Financial are the book running lead managers to the issue.
’’The company added that since the start of the 2021-22, it has continued the focus on growth and that the volume of delivered units in both the first and second quarters of the fiscal exceeded that of the quarters last year in which the COVID-19 pandemic and related lockdowns occurred.
