Tata May Invest In E-Tailer Snapdeal
Aug 6, 2014, 10:49 IST
MUMBAI: Ratan Tata is said to be considering a personal investment in Snapdeal, an e-commerce firm, at a time when online retail is generating investor euphoria on the back of exponential growth.
In a move that would signal his interest in India's emerging consumer internet story, the 76-year-old chairman emeritus of Tata Sons may buy out an early investor in Snapdeal through a secondary sale, people familiar with the development said.
Kunal Bahl, co-founder of Snapdeal, did not respond to TOI's query while an emailed questionnaire to Tata's office on Monday remained unanswered till the time of going to press on Tuesday.
The 76-year-old, who transformed India's largest private sector conglomerate with a string of marquee global acquisitions, is expected to be a minority investor in his personal capacity in the e-tailer. TOI could not ascertain the exact stake Tata would hold in Snapdeal if and when the transaction is completed.
While his holding is unlikely to be high, its real significance would lie in the buzz it would create for the four-year-old firm. Tata has always had in interest in technology; even so, the deal, if it goes through, would mark the ultimate coming together of the old and new guard.
People close to Snapdeal said Tata had visited the firm's headquarters in Delhi about a month ago and addressed employees.
Tata could be boarding Snapdeal just when the online marketplace, which has crossed $1 billion in gross merchandise sale by value—second only to Flipkart—is busy fending off a challenge from online retail juggernaut Amazon for No. 2 position in the domestic e-commerce market.
The investment would be testimony to the growing interest of established business houses in India's burgeoning internet commerce, which is poised to hit $9 billion over the next two years, according to US venture capitalist Accel Partners.
The potential investment by Tata, who stepped down from his day-to-day responsibilities at the $100 billion conglomerate about two years ago, would be a huge, timely shot in the arm for Snapdeal, with both Flipkart and Amazon declaring open war for dominance of India's fast-growing e-commerce market which has attracted top dollars from financial investors.
Bangalore-based Flipkart, the country's leading e-tailer with gross sales nearing $3 billion, last week raised $1 billion in funding mostly from existing investors led by Tiger Global, Naspers and Accel Partners. The Jeff Bezos-led Amazon responded a day later by announcing a $2 billion investment in what is becoming a hotly contested three-legged race.
Other big Indian business houses with interests in offline retail like Mukesh Ambani's Reliance Retail and the Aditya Birla Group have now begun unfolding their e-commerce plans as an increasing number of Indians shop online, driven in large part by rising smartphone penetration. India's galloping internet user base is now estimated at over 240 million, raising the possibility of it emerging as the world's largest digital commerce market along with China.
Snapdeal has already raised two rounds of funds so far this year, taking total capital raised to about $350 million at a valuation of a billion dollars. Its existing investors include San Jose- based eBay Inc, Singapore's Temasek, BlackRock, PremjiInvest, Intel, Nexus Venture Partners, NEA-IndoUS Venture Partners and Bessemer Venture Partners.
Bahl and schoolmate, Rohit Bansal, both 32, started Snapdeal four years ago as a daily deals site, modelled on GroupOn, later changing it into an online marketplace for merchants to sell their products. Before Snapdeal, the Delhi duo founded Money Saver, a physical coupon book business that offered discounts to consumers across retail outlets. Bahl, who'd returned after graduating from Wharton, and Bansal, armed with an IIT-Delhi degree, later transitioned from a physical format to mobile couponing till the idea of starting a daily-deals site struck them in January 2010.
Snapdeal says it sells about five million products across various categories like apparel, mobiles and electronics with over 25 million subscribers operating on a pure-play online marketplace model. Like Flipkart, it generates over 50% of its orders from mobile phones.
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In a move that would signal his interest in India's emerging consumer internet story, the 76-year-old chairman emeritus of Tata Sons may buy out an early investor in Snapdeal through a secondary sale, people familiar with the development said.
Kunal Bahl, co-founder of Snapdeal, did not respond to TOI's query while an emailed questionnaire to Tata's office on Monday remained unanswered till the time of going to press on Tuesday.
The 76-year-old, who transformed India's largest private sector conglomerate with a string of marquee global acquisitions, is expected to be a minority investor in his personal capacity in the e-tailer. TOI could not ascertain the exact stake Tata would hold in Snapdeal if and when the transaction is completed.
While his holding is unlikely to be high, its real significance would lie in the buzz it would create for the four-year-old firm. Tata has always had in interest in technology; even so, the deal, if it goes through, would mark the ultimate coming together of the old and new guard.
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Tata could be boarding Snapdeal just when the online marketplace, which has crossed $1 billion in gross merchandise sale by value—second only to Flipkart—is busy fending off a challenge from online retail juggernaut Amazon for No. 2 position in the domestic e-commerce market.
The investment would be testimony to the growing interest of established business houses in India's burgeoning internet commerce, which is poised to hit $9 billion over the next two years, according to US venture capitalist Accel Partners.
The potential investment by Tata, who stepped down from his day-to-day responsibilities at the $100 billion conglomerate about two years ago, would be a huge, timely shot in the arm for Snapdeal, with both Flipkart and Amazon declaring open war for dominance of India's fast-growing e-commerce market which has attracted top dollars from financial investors.
Bangalore-based Flipkart, the country's leading e-tailer with gross sales nearing $3 billion, last week raised $1 billion in funding mostly from existing investors led by Tiger Global, Naspers and Accel Partners. The Jeff Bezos-led Amazon responded a day later by announcing a $2 billion investment in what is becoming a hotly contested three-legged race.
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Another Indian business tycoon, Wipro's Azim Premj, has laid bets on the Indian consumer internet story through his family office PremjiInvest by picking up minority stakes in Myntra, now merged with Flipkart, and Snapdeal. Infosys co-founder Narayana Murthy recently formed an e-commerce joint venture with Amazon through his private investment firm Catamaran Ventures.Other big Indian business houses with interests in offline retail like Mukesh Ambani's Reliance Retail and the Aditya Birla Group have now begun unfolding their e-commerce plans as an increasing number of Indians shop online, driven in large part by rising smartphone penetration. India's galloping internet user base is now estimated at over 240 million, raising the possibility of it emerging as the world's largest digital commerce market along with China.
Snapdeal has already raised two rounds of funds so far this year, taking total capital raised to about $350 million at a valuation of a billion dollars. Its existing investors include San Jose- based eBay Inc, Singapore's Temasek, BlackRock, PremjiInvest, Intel, Nexus Venture Partners, NEA-IndoUS Venture Partners and Bessemer Venture Partners.
Bahl and schoolmate, Rohit Bansal, both 32, started Snapdeal four years ago as a daily deals site, modelled on GroupOn, later changing it into an online marketplace for merchants to sell their products. Before Snapdeal, the Delhi duo founded Money Saver, a physical coupon book business that offered discounts to consumers across retail outlets. Bahl, who'd returned after graduating from Wharton, and Bansal, armed with an IIT-Delhi degree, later transitioned from a physical format to mobile couponing till the idea of starting a daily-deals site struck them in January 2010.
Snapdeal says it sells about five million products across various categories like apparel, mobiles and electronics with over 25 million subscribers operating on a pure-play online marketplace model. Like Flipkart, it generates over 50% of its orders from mobile phones.