Axis Bank acquires FreeCharge for $60 mn

By Arti Singh

  • 27 Jul 2017
Credit: Reuters

Private-sector lender Axis Bank said on Thursday it has agreed to acquire e-commerce firm Snapdeal's digital payments platform FreeCharge for about Rs 385 crore ($60 million).

The bank has entered into a share purchase agreement with Jasper Infotech Pvt. Ltd, which runs Snapdeal, to acquire Accelyst Solutions Pvt. Ltd and Freecharge Payment Technologies Pvt. Ltd, collectively known as FreeCharge, the lender said in a stock-exchange filing.

The deal is subject to regulatory approvals, including from the Reserve Bank of India, and is likely to conclude by the end of September.

The transaction comes at a time when Snapdeal itself is in the last leg of negotiations to merge with bigger rival Flipkart.

By acquiring FreeCharge, Axis Bank will get access to 50 million mobile wallet users as well as the firm’s strong tech team, brand value and patented technologies. FreeCharge has over 2,00,000 merchants on its platform and claims that more than 90% of its transactions originate from its app.

The Axis-FreeCharge deal allows Snapdeal to further focus on its core e-commerce business while giving Axis agile and innovative technology capabilities in the financial services space in India, Kunal Bahl, Snapdeal's co-founder and chief executive, said in a statement.

Axis Bank said it has established the second-largest merchant network with over 4,33,000 point-of-sale machines and has been actively participating in payment innovations through partnerships with Samsung Pay and Kochi Metro.

“The acquisition of FreeCharge re-affirms Axis Bank’s determination to lead the journey of digitisation of financial services,” said Shikha Sharma, chief executive of Axis Bank.

A person aware of the development had told VCCircle earlier that several names had emerged as potential buyers for FreeCharge but Axis Bank was in advanced stages of discussions to buy the struggling wallet firm.

Over the past year, Snapdeal had been trying to monetise its investment in FreeCharge. It was initially looking at raising between $150 million and $200 million at a valuation of $1 billion for the digital payments unit. It had acquired FreeCharge in a $400-million stock-and-cash deal in 2015.

As efforts to raise funds failed, FreeCharge was put up for sale. Since December 2016, various players had been vying to acquire the firm, including Paytm, MobiKwik, Amazon, PayPal, Airtel Money and Naspers.

In May, Alibaba-backed Paytm signed a non-exclusive term sheet to acquire FreeCharge for $45-90 million in an all-cash deal. But the talks fizzled out over the offered price.

In March, Snapdeal appointed Jason Kothari as chief executive officer of FreeCharge. Before joining FreeCharge, Kothari led the turnaround and sale of SoftBank-backed online real estate company Housing. Prior to that, he was CEO and vice-chairman of character-based entertainment company Valiant Entertainment, which he led out of bankruptcy and turned around. The FreeCharge acquisition will be another feather in Kothari’s cap.

“FreeCharge brings with it immense technology and product expertise... the synergies catalysed by this acquisition sets the stage for further innovation and accelerated adoption of digital payments solutions in India,” said Kothari, who will help the wallet firm integrate with Axis Bank and then resume his position of chief strategy and investment officer at Snapdeal.

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