Now, SoftBank writes down Ola, Snapdeal investments by $1.4 bn
Japanese investor SoftBank Group Corp has written down the value of its investments in online marketplace Snapdeal and cab aggregator Ola by $1.4 billion. The two — Snapdeal run by Jasper Infotech Pvt. Ltd and Ola run by ANI Technologies Pvt. Ltd — are among SoftBank’s largest investments in India.
“Loss on financial instruments at FVTPL (fair value through profit and loss) was ¥160,419 million ($1.4 billion) compared to a gain of ¥114,377 million ($1.1 billion) in the previous fiscal year. This mainly resulted from recording a loss as the amount of changes in the fair value of the company’s financial instruments at FVTPL from the previous fiscal year-end to the fiscal year-end,” SoftBank said in an earnings report for the fiscal ended March 31.
“Financial instruments at FVTPL included preferred shares of Jasper Infotech Private Limited, which operates the e-commerce website Snapdeal.com in India, and ANI Technologies Pvt Ltd, which operates the taxi booking platform Ola, also in India,” the report said.
“The valuation of our financial investments are frequently adjusted upwards or downwards due to accounting policies, currency fluctuations and market dynamics. The loss reported in today’s earnings represents the aggregate impact of such revaluations during the course of the entire fiscal year,” a SofBank spokesperson said.
Despite the losses in India, SofBank notched up its second-best annual profit on cost cuts and a rise in subscribers at Sprint Corp. SoftBank’s operating profit for the year to end-March climbed 13% to 1.03 trillion yen ($9 billion) on flat revenue growth.
The development comes at a time when SoftBank, one of the biggest investors in Indian startups, is trying to sell Snapdeal to Flipkart Ltd for about $1 billion. On the other hand, Ola, which rivals Uber Technologies Inc, has managed to raise $350 million after hitting a fundraising trail in June last year, with SoftBank alone putting in $250 million.
Snapdeal, which has raised about $2 billion so far, saw its valuation hit about $1 billion from the peak of $6.5 billion in January last year, when the company raised $50 million from investors. Ola has also seen its valuation plummet from close to $5 billion in 2015 to $3-3.5 billion during the latest fundraise.
According to research firm Tofler, Snapdeal clocked revenues of ₹1,457 crore in 2015-16, while losses stood at ₹2,960 crore. Ola clocked revenues of ₹664 crore, while losses stood at ₹1,760 crore during the same period.
SoftBank is keen to sell Snapdeal to Flipkart in order to cut its losses on an investment that has not worked well.
SoftBank picked Snapdeal over Flipkart and Paytm in 2014 but the marketplace has lost out to both in e-commerce and digital payments, respectively. Now, SoftBank is keen to invest huge amounts of cash in the two Snapdeal rivals.
SoftBank has invested about $1 billion in Indian consumer Internet startups.