Ratan Tata invests in Snapdeal

The investment amount, however, was not disclosed

Ratan Tata, Chairman Emeritus of Tata Sons, has made a personal investment in e-commerce company Snapdeal. This announcement, which is expected to intensify the competition in the online retail space, comes just a day after Snapdeal and Tata Value Homes entered into a strategic alliance.

The value of the investment made by Ratan Tata has not been disclosed.

Recently, Flipkart had raised $ 1 billion in funds and soon after, Amazon announced a $ 2 billion investment in India.

“This is a very proud and exciting moment for the entire Snapdeal family. An investment by a legendary and respected figure like Mr. Tata is an excellent validation of our focused strategy on building a long term enterprise and marks the start of a very important phase for the company,” Snapdeal co-founder and CEO Kunal Bahl said in a statement. Snapdeal, which has 25 million subscribers, recently crossed $ 1 billion in sales.

This isn’t the first time an eminent industrialist has invested a personal stake in a company though. Premji Invest is an investment company floated by the family office of Azim Premji while Catamaran Ventures is owned by Narayana Murthy. Both of them are private equity funds which invest in startups. Snapdeal already has funds from Premji Invest, among others.

Industry analysts say that this marks a very important point in Snapdeal’s growth trajectory, primarily because of the stature of Ratan Tata.

“There are two key takeaways from this. One, that Ratan Tata believes in the online e-commerce space and its future in India. Two, Snapdeal’s performance has been impressive and he thinks this company’s going to go places,” said Mohit Bahl, head of retail, KPMG.

Ratan Tata’s personal investment, while it entails a vote of confidence, also emphasises that Snapdeal has bigger challenges ahead now.

“Private equity funds are quite different from personal stakes. So the premium on quality of governance and management that someone like Ratan Tata would place while investing in a firm would be quite large. That means that they have Mr. Tata’s vote of confidence but they also have their work cut out,” according to Arvind Singhal, chairman, Technopak, a leading consultancy.