Snapdeal is finally selling off FreeCharge, its mobile transactions platform, to Axis Bank. Snapdeal parent to obtain 100 percent value in FreeCharge for a consideration of Rs 385 crore ($60 million). The bank said in a communication to the Bombay Stock Exchange that it has entered into a share purchase agreement with Jasper Infotech Private Ltd.
The deal is subject to regulatory approvals, including from the Reserve Bank of India, and is likely to conclude by the end of September.
Snapdeal’s move is likely to facilitate its own sell to Flipkart, which has been stuck over valuation problems. Flipkart has offered $900 million for Snapdeal and the panel of the company may have eliminated the deal. Latest media reviews said.
The sale of Freecharge will give Snapdeal some breathing time before the deal with Flipkart closes. Freecharge mainly went to Axis Bank as it is an all cash offer. This deal will provide Axis Bank entrée to latest edge technology that traditional businesses struggle to build in house,” said a person privy to the development.
By acquiring FreeCharge, Axis Bank will get access to 55 million mobile wallet users as well as the around 150 to 200 professionals and branded technologies. FreeCharge has more than 2,00,000 traders on its platform and claims that over 90% of its transactions develop from its application.
The Axis-FreeCharge deal allows Snapdeal to further focus on its core e-commerce business while giving Axis agile and innovative technology abilities in the financial services space in India, Kunal Bahl, co-founder and chief executive Snapdeal claimed in a statement.
“The acquisition of FreeCharge re-affirms Axis Bank’s determination to lead the journey of digitization of financial services,” said Shikha Sharma, chief executive of Axis Bank.
The selling price of FreeCharge is a good wake-up call the start-up environment, traders, founders and those intending to buy similar start-ups.