Jasper Infotech Pvt. Ltd, which owns domestic e-commerce company Snapdeal, has formed an agreement with Future Group's supply chain solutions subsidiary to sell its logistics arm Vulcan Express Pvt. Ltd in an all-cash deal valued at $5.5 million (Rs 35 crore).
Earlier this month, The Economic Times reported that Future Group was eyeing Snapdeal’s logistics arm.
The sale of Vulcan comes as the e-commerce company tries to streamline its operations in lieu of its cash-strapped situation. Earlier, the company had sold off its mobile wallet business, FreeCharge, for $60 million -- a lesser price compared with what it paid during the wallet's acquisition. In August 2016, VCCircle had reported that Snapdeal was looking to sell a stake in unit FreeCharge at a valuation of as much as $1.2 billion (Rs 8,000 crore).
“Similar to our recent sale of FreeCharge, we believe Snapdeal’s sale of Vulcan Express to Future Group is a successful deal for all three parties - Snapdeal divests off an asset that is non-strategic in nature for Snapdeal 2.0, allowing it to focus its capital and management on its core e-commerce business," Jason Kothari, chief strategy and investment officer, Snapdeal, said in a statement.
"Future Group gains high-quality pan-India end-to-end e-commerce logistics capabilities, and Vulcan secures a great new home for its business, including its team. We wish Vulcan and Future Group the best in their future together,” Kothari, who also led the recent sale of Snapdeal-owned FreeCharge to Axis Bank, added.
Vulcan Express, which was born out of Snapdeal post the firm's failure to acquire GoJavas in which it had bought 42% stake, provides end-to-end solutions, including pickup, consolidation, warehousing, intercity movement, last mile delivery, payments collection and reverse logistics. It runs operations across 100 cities and 2,000 pincodes.
“This transaction provides an immense opportunity for Vulcan Express to grow rapidly and benefit from the vast linkages by being part of Future Group," said Hardeep Singh, chief executive officer, Vulcan Express.
The sale comes four months after the firm received a Rs 152 crore infusion from Snapdeal. The domestic e-commerce firm also had planned to sell off its logistics arm as part of the Flipkart merger that failed. Vulcan’s net revenue jumped to Rs 184 crore for the financial year 2015-16 from Rs 26.7 crore the previous year. However, losses increased six times to Rs 20 crore from Rs 3.2 crore.
According to Biyani-run Future Group, the acquisition of Vulcan will help the company realise its Retail 3.0 strategy. The strategy will use a tech layer on top of a physical store. "Through Vulcan, we plan to boost our last-mile capabilities and also offer state-of-the-art solutions to our e-commerce and retail clients, including realising our disruptive vision of Retail 3.0,” said Kishore Biyani, founder and chairman, Future Group.
Future Supply Chain Solutions currently has 44 warehouses, 14 logistics hubs, 106 branches and over 4.2 million square feet of warehousing space. Future Supply Chain’s network provides services and solutions to Future Group as well as third-party customers across contract logistics, express logistics and temperature-controlled logistics.
The Biyani-run group has acquired many firms in the past. Last year in October, Future Retail entered into a share purchase agreement with Shoppers Stop for its $100-million acquisition of Hypercity Retail in a stock-and-cash deal. Earlier this month, Future Retail said that it will acquire 100% of Travel News Services India for Rs 100 crore.
Metta Capital Advisors acted as the financial advisor to Future Supply Chain for the transaction.