Snapdeal allots preference shares to its founders, Nexus Venture Partners

Image: Adnan Abidi / Reuters

Snapdeal made headlines after it issued preference shares worth Rs 113 crore to its existing investor Nexus Venture Partners and the company’s founders Kunal Bahl and Rohit Bansal against its acquisition of Unicommerce eSolutions that it made in 2015.

The details of previous transaction could not be ascertained as Snapdeal, unlike its other acquisitions, had never officially announced this particular deal.

This current development comes at a time when the ecommerce venture has been struggling for a while to sustain its position in the burgeoning industry and is in talks with its larger rival Flipkart for a proposed sell out. It is understood that the companies have agreed to sign a non-binding letter of intent for the proposed merger.

While Nexus is one of the early investors in Snapdeal, the company’s largest investor, Japan’s telecom and internet giant Softbank is leading the talks with Flipkart for a proposed sale of the beleaguered ecommerce company. When contacted, executives from Nexus Venture Partners and Snapdeal declined to comment on the development.

Apart from Softbank, other investors who are also involved in the talks proposed merger are Nexus Venture Partners and Kalaari Capital. Both have reportedly given the nod to the proposed sale and cleared the way for what could also be called a distressed sale of Snapdeal to Flipkart.  Former Kalaari Capital MD, Vani Kola’s resignation earlier in May from Snapdeal board was also seen as a sign of venture capital firm’s willingness to reach clinch the deal with SoftBank.

If talks fructify and the deal goes through, Snapdeal’s existing investors Kalaari Capital and Nexus Venture Partners, who are negotiating with SoftBank, will pocket $30 million and $60 million, respectively. SoftBank — the largest investor in Snapdeal —  which recently made headlines for writing down its investments in Snapdeal is leading the  talks for the proposed sale of the ecommerce firm is and negotiating to make a separate investment in Flipkart through the proposed transaction.