Axis Bank may buy Freecharge from Snapdeal for ₹350-400 cr
Private sector lender Axis Bank Ltd is nearing a deal to buy digital payments platform Freecharge for ₹350-400 crore in cash, giving much-needed breathing space to Freecharge’s parent company Snapdeal, which is separately in talks to sell itself to larger rival Flipkart.
By buying Freecharge, Axis Bank will get a popular digital payments brand as well as access to high-quality technology that traditional companies typically struggle to build compared with internet startups.
Axis Bank and Freecharge are likely to announce the deal this week, two people familiar with the matter said, on condition of anonymity.
Freecharge had also held lengthy talks with Paytm (One97 Communications Ltd) but chose to go with Axis Bank as the bank offered a higher price, the people said.
Axis Bank and Snapdeal (Jasper Infotech Pvt Ltd) didn’t immediately respond to emails seeking comment.
The sale of Freecharge will mark the most stunning collapse in India’s startup world, even more so than that of its parent company, which has seen its fortunes dip since the start of 2016. Snapdeal bought Freecharge for $400 million in April 2015 in what was then the largest start-up deal in India.
Last year, Freecharge hit the market to raise funds separately. Until late January, Snapdeal was confident Freecharge would raise fresh capital at a valuation of $700-900 million. But because of differences between board members, Freecharge passed up at least two funding offers.
Since late last year, the Snapdeal founders, and venture capital (VC) firms Nexus Venture and Kalaari Capital have been locked in a boardroom battle that has resulted in Snapdeal and Freecharge passing up funding deals, cutting jobs and being forced to seek buyers. SoftBank disagreed with the others over the firm’s valuation in a potential sale or funding round.
Separately, Axis Bank on Tuesday reported a 16.07% fall in net profit for the quarter ended June 30 because of higher bad loans and provisions.