Snapdeal files DRHP to raise Rs 1,250 Cr from public markets

SoftBank backed value-e-commerce platform, Snapdeal, has filed its Draft Red Herring Prospectus (DRHP) with market regulator SEBI to raise Rs 1,250 crore in fresh issue of shares through an initial public offering (IPO). In addition, existing investors in the company including SoftBank, Foxconn, and Sequoia will be selling 3,07,69,600 equity shares in the company.

The company has appointed Axis Capital Limited, BofA Securities India Limited, CLSA India Private Limited and JM Financial Limited as the book running lead managers for the IPO.

Here are a few key takeaways from Snapdeal’s DRHP filing:

• Investors who will look at a partial exit through Offer For Sale (OFS) of equities include SoftBank, Foxconn, Sequoia Capital, Kenneth Stuart Glass, Myriad Opportunities Master Fund, Ontario Teacher’s Pension Plan Board, Laurent Amouyal and Madison India Opportunities Trust Fund.

• Snapdeal is also likely to undertake a pre-IPO placement for an aggregate amount of Rs 250 crore which will not exceed 20 percent of the fresh issue. If the pre-IPO is completed, the fresh issue size will be reduced commensurately. 

• The company will utilise Rs 900 crore of the proceeds to fund its organic growth including marketing and promotions and building its technology stack. The company reported marketing and business promotion expenses of Rs 126.27 crore for the six month period from April 1, 2021, to September 30, 2021. Marketing and business promotions constituted 34.62 percent of the company’s total income for the financial year 2020-21.

• The company reported losses of Rs 177 crore for the six month period ending September 30, 2021, for the financial year 2021-22. The company reported losses of Rs 125.4 crore for the financial year 2020-21, while the corresponding figure for the year-ago period was Rs 273.5 crore.

• Snapdeal’s subsidiaries include Unicommerce eSolutions, Newfangled Internet Private Limited which operates co-working space under the brand name of SproutBox and E-Agility Solutions which is under liquidation.

• Snapdeal’s largest shareholder is SoftBank and holds 35.41 percent shares in the company, followed by B2 Professional Services LLP, whose directors are listed as Yashna Bahl and Parul Bansal, spouses of co-founders of the company, Kunal Bahl and Rohit Bansal respectively.

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