Jabong parent gets `762 crore, at 1/3 of last year’s valuation

JABONG’S SALES GREW 13.8% TO `1,503 CRORE IN 2015. IT RECEIVED 5.4-MN ORDERS AND CONDUCTED 8.8-MN TRANSACTIONS.

NEW DELHI: Rocket Internet-backed Global Fashion Group (GFG) has raised 300 million euros (around `762 crore), but that has come at a huge cost. GFG, which was valued at 3.1 billion euros (around `24,000 crore) last summer, witnessed a two-third reduction in its valuation to 1 billion euros (around `7,600 crore) after the latest funding round.

GFG is a clutch of fashion e-tailing companies in emerging countries. One of its subsidiary is domestic fashion e-tailer Jabong, which has been up for sale for almost a year. But, rising operational problems, exit of founders and valuation hassles has spoilt many conversations with potential buyers, Amazon and Paytm being two of them.

Jabong has been a pain point in Rocket Internet’s India portfolio. According to its financial statement, Jabong’s net revenue grew just 7.1% in 2015 to `869.1 crore, against the previous year, while GFG’s revenue grew 48%.

In the last quarter of 2015, Rocket Internet took the company’s management in its own hands. Experts called it a cleanup before sale. To its credit, Jabong was able to reduce its gross losses by 70% to `46.74 crore by the end of the year.

Indian e-tailers are already facing valuation correction. Morgan Stanley, a minority investor in Flipkart, reduced the value of its stake in the company by 27%. Snapdeal was valued $0.5 million less than its gross merchandise value (GMV) of $7 billion.

GMV is the value of goods traded on an e-commerce platform.

However, according to analysts, Jabong’s valuation might not be directly linked to GFG’s valuation. “But, that does not mean that Jabong will not have to improve operationally. It will have to find new segments and new buyer base,” said an analyst with one of the big-four consultancy firms.