Snapdeal-Flipkart merger overcomes last hurdle as Nexus finally says yes
Photo Credit: Shah Junaid/VCCircle

E-commerce firm Snapdeal's largest shareholder SoftBank, which has been pushing for a consensus on the company's board for its sale to Flipkart, has managed to convince early investor Nexus Venture Partners in this regard, a person aware of the development confirmed to VCCircle.

Nexus will reap $50-60 million from the deal while co-founders Kunal Bahl and Rohit Bahl will get $15 million each. Flipkart will soon sign the term sheet and start due diligence, the person added.

It is believed the deal was stuck because of disagreements between Kalaari Capital, another early investor in the company, and Nexus over its terms. Nexus was insistent on an all-cash deal, but had to finally agree to a cash-cum-stock deal.

The development was first reported by TV channel ET Now.

Snapdeal has had multiple board meetings to address investors' concerns. However, none of them could break the logjam between SoftBank and Nexus.

Earlier, Nexus and Kalaari disagreed with SoftBank over its offer to invest in the e-commerce firm and its mobile wallet subsidiary FreeCharge, wherein it proposed a valuation that was less than half of what Snapdeal racked up in its last funding round in February 2016. They rejected the offer “as the valuation drop would have led to a significant increase in SoftBank’s stake and a corresponding slide in their ownership.”

A CNBC-TV18 report had said Nexus was seeking a higher stake in the merged entity. It also said that the investor had changed its earlier stance of selling its entire stake in Snapdeal. VCCircle couldn’t verify this.

Nexus first invested in Snapdeal in January 2011 during its Series B round via its Nexus India Direct Investments II fund.

The fund invested six more times, participating in Snapdeal’s Series C, D, E and E1 rounds. Additionally, a separate fund named Nexus Opportunity Fund invested in Snapdeal’s Series E round. In total, Nexus invested Rs 210 crore in Snapdeal from 2011 to 2014, picking up a stake of around 10%.

SoftBank, which has pumped nearly $900 million into the startup, holds two seats on Snapdeal’s board, while Nexus and Kalaari hold one each.

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