Snapdeal may be looking for a potential exit; in talks with Flipkart and Paytm

Snapdeal is one of the largest online marketplaces in the country, and is directly competing with the likes of Flipkart, Amazon, ShopClues and others. However, the company has been going through a rough ride from some time now. Starting from the struggle to raise fresh funds, to a number of high level exits and the news of retrenchment of around 1000 employees have hit the firm’s reputation quite hard. Now, it is believed that the startup is in talks with Flipkart and Paytm for potential stake sale. Softbank, which has invested ~$900 million out of the $2 billion capital raised by the startup, is leading the talks with the two potential buyers.

However, seeing the startup’s current cash crunch situation and dwindling image and operating ability, it may take a significant valuation hit as the price being offered by Snapdeal is between $1.5-1.8 billion. This is a major correction compared to the $6.5 billion peak valuation in its previous funding round in 2016.

Although it is said that Snapdeal is in talks with both Flipkart and Paytm, its discussion with Paytm is expected to be the deal clincher. Both Snapdeal and Paytm have deep investor links with Softbank being the common thread. While Softbank is the largest shareholder in Snapdeal with ~35-40% stake, Alibaba is the largest investor in Paytm, which, in turn, counts Softbank as its top investor.