Snapdeal plans $350-400 million IPO, eyes valuation of up to $2.5 billion

E-commerce retailer Snapdeal is eyeing an initial public offering to raise $350-400 million, according to sources aware of the talks, and is looking for a valuation of $2-2.5 billion. The company, which has backers like SoftBank, wants to look at this as an opportunity to allow retail investors to become a part of its expansion story in tier-2, 3, and 4 markets.

“Snapdeal is a reinvention story and they want to take the value story to consumers in Bharat,” said a source privy to the discussion. The sources also said that JM Financial, Axis Bank, and Bank of America have been roped in as the bankers to run the mandate.

Emails sent to Snapdeal, SoftBank, Axis Bank, and JM Financial did not elicit a response.

If the company decides to proceed with the IPO process, it will join the ranks of other start-ups that are looking to join the listing frenzy. In the first four months of this fiscal, about 12 companies have raised as much as Rs 27,000 crore through listings.

Snapdeal, which was founded in 2010, has off late repositioned itself as a player in the value e-commerce segment. Co-founders Kunal Bahl and Rohit Bansal put in place a plan called Snapdeal 2.0 in 2017 after talks of a merger with Flipkart fell through.

Value play

According to a recent report by Kearney, the value e-commerce segment – defined as a category that caters to customers who focus on affordable products – is expected to grow to about $20 billion by 2026 and $40 billion by 2030 in India.

Co-founders Kunal Bahl (left) and Rohit Bansal. JM Financial, Axis Bank, and Bank of America have been roped in as the bankers to run the mandate

Recently, Snapdeal said it saw huge traction in the sale of kids’ apparel, a jump of 493 per cent in the sixth month period between January and July.

This growth was led in large part by purchases made in the Rs 400-600 range for combo pack offerings, followed by the second best-selling range of Rs 200-400 for individual items.

Value e-commerce will emerge as the biggest growth opportunity within lifestyle retail and may grow 10 times in 10 years, the Kearney report, titled “Value e-commerce: the next big leap in India’s retail market,” says.

As part of its efforts to deepen the availability of value merchandise online, Snapdeal has in the last year added more than 5,000 manufacturer-sellers on its platform, it said in March.

Most of these manufacturer-sellers are from hubs like Meerut, Ludhiana, Tiruppur, Jaipur, Panipat, Surat, and Rajkot and cover popular products like juicers and food processors, steel and copper utensils, crockery, bed linen, fashion accessories, kids’ wear, sarees and suits, casual apparel, and fitness equipment.