Snapdeal-Alibaba funding deal falls apart

As speculated by experts, funding talks between leading marketplace Snapdeal and Chinese giant Alibaba may not reach a logical conclusion over high valuations being sought by Snapdeal. Amid stiff competition and under pressure to turn profitable, Snapdeal was eyeing a record funding boost of Rs 6,200 crores from Alibaba. Even earlier, both had held talks but the deal could not be finalised over valuation issues.

Jasper Infotech, which owns Snapdeal, is looking for a valuation of around 5 billion dollars (around Rs 30,000 crores) after it raised Rs 3,800 crores from Japan's SoftBank in October last year. That time the company’s valuation stood at Rs 11,200 crores. Others like eBay, BlackRock, Ratan Tata, PremjiInvest, the personal investment arm of Wipro Technologies Chairman Azim Premji, and hedge funds Myriad Asset Management and Tybourne Capital also hold a stake in Snapdeal.

Rising operational costs are expected to increase losses by almost five times, growing to almost Rs 1,500 crores this fiscal year. The company is said to be about 30 percent behind Flipkart and Amazon in terms of GMV (gross merchandise value) and it is trying hard to bridge the difference by adapting discounting and product expansion strategies.

Meanwhile Snapdeal has roped in actor Aamir Khan as its brand ambassador. Amir Khan would feature in soon to be launched social media and television campaign of Snapdeal, designed by Leo Burnett.