Jabong in talks with Snapdeal, Aditya Birla for sale

Online fashion retailer Jabong, owned by Global Fashion Group (GFG), is in talks with online retailers Snapdeal, Flipkart and Aditya Birla Group’s fashion portal, abof.com. Its owners AB Kinnevik and Rocket Internet are unwilling to pump in any more capital given the gloomy state of economic affairs.

Kinnevik’s CEO Lorenzo Grabau was in India last week to meet executives at Snapdeal, Abof, Future Group and Flipkart. So far, Snapdeal and Aditya Birla are the front-runners. The asking price is believed to be 250-300 million dollars (Rs 1,684 crores to Rs 2,021 crores) but the deal is expected to be closed at much lower valuation. Flipkart is keen on acquiring Jabong as it already owns Myntra, a competitor of Jabong.

Kinnevik is the largest shareholder of GFG and is negotiating with buyers on behalf of Rocket Internet which owns more than 21 per cent of GFG. Rocket Internet recently sold FabFurnish to the Future Group in a distress sale. Jabong was founded under the banner of German incubator Rocket Internet in 2012.

Jabong’s revenues dropped 7 per cent to Rs 869.1 crores in 2015 from the year earlier but its losses were trimmed to Rs 46.7 crores from Rs 159.5 crore after a clampdown on discounts. However, its GMV rose 14 per cent to Rs 1,503 crores from almost 5.4 million orders. Jabong’s net sales grew 14 per cent to 32.6 million in the March quarter with a gross profit of 0.2 million as it derisked business by moving more towards the consignment and marketplace model and away from discounting.

In September 2014, Rocket Internet merged Jabong with four other online fashion retailers in Latin America, Russia, the Middle East, South-east Asia and Australia to create GFG.