Global Markets

Snapdeal-Flipkart Deal: Credit Suisse Contacts Minority Shareholders

By Mrigank Misra

Posted on June 29, 2017

Snapdeal Flipkart Deal: Credit Suisse Contacts Minority Shareholders

Credit Suisse, an investment bank who is advising Snapdeal on its sale to Flipkart is reaching out to minority shareholders to build consensus over the sale of Snapdeal. Here is more on it

To Build Consensus over the Snapdeal Flipkart Deal:

In the process of acquisition of Snapdeal by Flipkart, the two co-founders Rohit Bansal and Kunal Bahl would get around $30 million while the two early backers Kalaari Capital and Nexus Venture Partners would inherit around $60 million. This has raised objection from its shareholders. Minority investor Premji Invest wrote two times to Snapdeal over this on separate occasions and this is the reason why Credit Suisse is reaching out to them.

Premji Invest wrote that though they are okay with what the two co-founders are getting but they have objections with the other two backers who also have board seats. Apart from Premji Invest, there are other minor investors like Ratan Tata, Foxconn, BlackRock, Ontario Teacher’s Pension Plan and Temasek.

Why Snapdeal on sale?

E-commerce Company Flipkart wants that Snapdeal should bring all its shareholders on board and only then the transaction and acquisition will take place. If the objections raised by these minority shareholders flames then it will create a big trouble for Snapdeal whose market value will went down to $1 billion from $6.5 billion after the deal. That is the reason why Snapdeal’s advisor Credit Suisse is working hard to bring its investors on board and agree to the proposed terms for the deal. The payments granted for the co-founders and backers are based on special payments which the Premji Invest has reservations with.

Other large investors like Softbank has worked on bringing its investors on one board over the terms proposed in the deal. It has managed to make the deal and has also signed the term sheet with Flipkart. Softbank has already written off $1 billion of its valuation in Snapdeal. Snapdeal is also an e-commerce Company that is going to be purchased by Flipkart.