India's Snapdeal buys mobile payments platform FreeCharge

Snapdeal, one of India's largest online retailers, has bought mobile-payments platform FreeCharge in a deal it hailed as "one of the biggest acquisitions in the history of the internet industry in India".

Snapdeal, which was valued at around $2bn at its last fundraising, did not disclose the transaction's size, but estimates from industry figures suggested it was likely to be worth about $400m.

"It's got to be at least $400m, because FreeCharge was valued around that when it last raised money. I wouldn't be surprised if it was even a little higher," said Sanjay Swamy of Bangalore-based technology investment group AngelPrime.

The deal highlights the boom in India's ecommerce sector, which has seen a spate of recent fundraising at valuations of more than $1bn, buoyed by investor excitement over the country's rapidly growing internet economy.

Snapdeal is engaged in a three-way battle with local rival Flipkart and US-based Amazon to become India's leading ecommerce platform, and most recently raised $627m from SoftBank of Japan last October.

Both Snapdeal and Flipkart have attracted feverish attention from investors, amid speculation that they might eventually seek to follow China's Alibaba and launch a blockbuster initial public offering in the US.

Kunal Bahl, Snapdeal co-founder, said Wednesday's deal signalled a shift in which his company would now offer a range of services beyond traditional retail ecommerce, including services from FreeCharge, which lets users pay utility and other bills through their mobiles.

"The age of monolithic ecommerce platforms is over," Mr Bahl said. Snapdeal claimed the deal would make it "the largest mobile commerce company in India", while also growing its user base to "over 40m".

It is the company's second acquisition in a little over a week, following its acquisition of a majority stake in RupeePower, an online financial products platform.

The move is part of a wave of consolidation in India's ecommerce space as larger players flush with funding acquire smaller rivals to expand market share, move into new product areas, or acquire customers.

It also underscores the crucial importance of mobile commerce in an Indian market that is likely to have more than 500m internet users by 2020, but where the vast majority of transactions will happen on smartphones, rather than computers.

"What's happening clearly in India is that mobile commerce is everything. Ecommerce is just going to be subsumed by mobile, and so it makes sense that companies like Snapdeal are buying others who have plenty of mobile customers," Mr Swamy says.

India's ecommerce companies are grappling with new ways to reach this fast-growing group of mobile-only customers.

In one prominent example, fashion ecommerce group Myntra, which was bought by Flipkart last year for $300m, plans to shut its website entirely next month, to focus on sales through its mobile app.

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation