Indian Economy News

Snapdeal to spend $1 billion on 5-6 acquisitions this year

New Delhi: Leading e-commerce company Snapdeal is set to spend about $1 billion on a series of acquisitions this year. In an interview with Business Standard, Rohit Bansal, co-founder and chief operating officer of the city-based company, said, "We are looking to close five to six deals this calendar year." Most of these would be in the technology segment, though other areas could also be explored, he added.

Sources estimate the company will invest about $1 billion on the acquisitions. Snapdeal refused to comment on the amount.

The proposed acquisitions might help Snapdeal take on rival Flipkart, which aims to double its gross merchandise value (GMV) of products sold to $8 billion this year. Snapdeal, whose GMV is pegged at about $3 billion, aims to touch $9-10 billion by the end of this year. Without divulging the GMV, Bansal said Snapdeal's business had grown 25 times in the past 18 months.

The planned acquisitions, Bansal said, could be a combination of Indian and foreign companies. The company is learnt to be in the process of closing a deal worth about Rs 2,500 crore with online mobile recharge platform FreeCharge.

Snapdeal, started in 2010, is believed to be gearing up for fund-raising, too. Even as Bansal said the company was well-funded, it is learnt to be in talks with potential investors such as China's Alibaba, Taiwan's Foxconn and an existing investor, Japan's SoftBank.

Asked whether Alibaba could be a strategic investor, Bansal said the company was open to all possibilities, though there was no development on that front so far. "We have known Alibaba for three years; it's not as if we discovered each other suddenly," he said. On the feasibility of SoftBank, which had invested $627 million in Snapdeal last year, increasing its investment, Bansal asked, "If it's right for us, why not?"

In 2014, Snapdeal had raised about $1 billion. Sources say investors are keen to infuse cash in the company at a valuation of $6-7 billion.

On the timeframe the company had set to turn profitable, Bansal said, "If we want, we could turn profitable tomorrow...we are here for the long term, at least two to three decades, and we have to keep building infrastructure for higher growth...If I care only about profits, I could flip the switch and turn profitable. But we choose not to and instead, invest ahead of time."

He added neither the company nor its investors were worried about losses.

Mobile, multimedia, big data, and language are some areas in which Snapdeal plans to strengthen its presence. Bansal noted 40 per cent of sales were through recommendations to customers, with the help of big data.

"Our innovation centre in Bengaluru will be very crucial in the long run. We plan to invest about $100 million on that in the next three years," he said.

Recently, Snapdeal bought luxury fashion portal Experts said the move was possibly aimed at matching Flipkart's acquisition of fashion portal Myntra.

While Flipkart targets to ship a billion units a month and serve 100 million customers by 2018, Snapdeal is focusing more on its existing 40 million connected users, 70 per cent of which are from tier-II cities.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.