Softbank Group writes off $555m in India’s Ola, Snapdeal investments

Photo: Bloomberg

Japan’s Softbank Group Corp. has written-off close to $555 million (¥58.1 billion) in two of its biggest investments in India—cab hailing firm Ola (ANI Technologies Pvt. Ltd) and e-commerce marketplace Snapdeal (Jasper Infotech Pvt. Ltd), the company said in its six monthly earnings report.

Softbank in its report stated a loss of ¥58.1 billion from financial instruments for the six-month period ending 30 September 2016 compared to a gain of ¥112.6 billion in the year-ago period.

“Gain or loss arising from financial instruments at FVTPL (fair value through profit or loss) comprises mainly changes in fair value of preferred stock investment including embedded derivatives, such as ANI Technologies Pvt. Ltd and Jasper Infotech Private Limited in India, designated as financial assets at FVTPL,” the company said, explaining the loss during the six-month period.

Softbank on Monday announced second quarter results posting a profit of ¥528.6 billion ($5.1 billion), boosted by a favourable exchange rate, as well as by healthy operations in home market Japan.

The news comes in at a time when both Ola and Snapdeal are looking to raise fresh funds to sustain amid growing competition from rivals.

Mint reported in June that Ola was looking to raise $300-400 million from existing and new investors.

Ola needs to raise funds this year to refill its cash coffers and to maintain its lead over rival Uber.

Both Uber and Ola have been burning significant cash in India to win market share by wooing customers through discounts.

Bengaluru-based Ola has so far raised about $1.2 billion from Tiger Global Management, Matrix Partners, SoftBank Group, Didi Chuxing and several other investors.

Snapdeal too has struggled to hold on to its market share and has slipped to a distant number three amid a tough battle between American giant Amazon and Flipkart.

In May this year, Softbank in its quarterly results had indicated the slowing sales growth at Snapdeal.

Snapdeal’s gross sales, which exclude discounts and product returns, had slowed to 90% in the year ended 31 March from 301% in the previous year, according to a presentation by SoftBank Group, Snapdeal’s largest investor in May.

Slow funding environment and an attempt to cut costs and conserve cash pushed Snapdeal to shut Exclusively, its online platform for premium and luxury fashion goods, in August.

Last year, Snapdeal.com raised $500 million mainly from Chinese e-commerce firm Alibaba Group, Foxconn Technology Group and existing investor SoftBank Group, which then valued the Delhi-based firm at about $4.8 billion post money.

Also Read: SoftBank to route big investments via giant tech fund to control debt

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This article was first published on Livemint.com

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.