Snapdeal withdraws $152 million IPO plan

• ByStartupStory     |    December 9, 2022

As the market for internet companies remains challenging, the online marketplace Snapdeal has withdrawn its draught red herring prospectus (DRHP) and postponed its IPO. The SoftBank-backed startup delays its planned IPO at a time when tech equities internationally are seeing a big decline, joining companies like Boat, PharmEasy, and Droom in doing so.

Following the public listing of major tech businesses including Zomato, Paytm, Nykaa, and Nazara Technologies, among others, Snapdeal submitted its DRHP to the Securities and Exchange Board of India (Sebi) in December of last year.

“Given the state of the market, the business has chosen to withdraw the DRHP. According to future market conditions and the company’s requirement for expansion financing, an IPO may be reconsidered, a Snapdeal spokeswoman stated.

Additionally, the Sebi never approved of Snapdeal’s strategy. Snapdeal was seeking an offer-for-sale (OFS) of up to 3,07,69,600 shares from exiting investors in its initial public offering, as well as a main issuance of shares valued at Rs 1,250 crore.

The largest investor in Snapdeal is SoftBank, which holds a 35.67% interest through its affiliate Starfish Pte. Ltd. planned to sell up to 24 million shares, while Foxconn partner Wonderful Stars Pte Ltd., a chip manufacturer, planned to sell up to 2.97 million shares. Sequoia Capital, Myriad Opportunities Master Fund, and the Ontario Teacher’s Pension Plan Board (OTPPB) of Canada were also expected to sell their interests.

It had intended to use Rs 900 crore of the offering’s proceeds to support efforts for organic growth and the remaining funds for general business needs. The joint book-runners were Axis Capital, JM Financial Ltd, CLSA India, and BoFA Securities India. Snapdeal was founded by Kunal Bahl and Rohit Bansal as a company that sold coupon booklets. In 2010, the company switched to an online deals platform, and in 2012, it became an ecommerce marketplace.

In India’s ecommerce market, the company competes with companies like Amazon, Walmart-owned Flipkart, and social commerce platform Meesho. In the fiscal year 2021, Snapdeal’s consolidated operating revenues fell by 44% to Rs 471.8 crore, but its losses decreased by more than half to Rs 125.4 crore. The company has not yet released its FY22 financial results.

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