The Snapdeal FreeCharge love story seems to be over as Axis Bank, the third largest banking sector in India is all set to acquire FreeCharge. According to sources, the board of Jasper Infotech which is the parent company of Snapdeal confirmed the deal with the banking major. As part of the deal, Snapdeal would get Rs. 385 crore from Axis Bank. The amount shall help the company to make up for the burning cash they used to build warehouses throughout India!
An Axis Bank executive said, “The Bank has today entered into a share purchase agreement with Jasper Infotech (Snapdeal) to acquire 100% equity capital of Accelyst Solutions and Freecharge Payment Technologies (Accelyst and Freecharge Payment collectively referred to as Freecharge).”
FreeCharge is an e-commerce portal which facilitates digital payments across different segments and categories. Started by Kunal Shah and Sandeep Tandon in the year 2010, FreeCharge went on to become one of the most popular platforms for online recharges of mobile phones, DTH and data cards.
Why did the Snapdeal FreeCharge deal fail?
Earlier, in the year 2015, Snapdeal acquired FreeCharge for a record breaking amount of Rs. 2,400 crore. The Snapdeal FreeCharge business deal is still one of the biggest takeovers in the Indian e-commerce space.
In the past few years, nothing seemed to have gone right for Snapdeal. Most of its strategies backfired. At earlier times, Snapdeal was a tough competitor for Flipkart. However, with the entry of Amazon in India, the competition in the e-commerce space became fierce. While Flipkart managed to do a few things right to survive in the competitive market, Snapdeal never did anything ground-breaking. Most of the e-commerce companies are just the replica of each other and Snapdeal was not an exception either! It went on burning cash to build and maintain warehouses throughout India.
The Snapdeal FreeCharge business deal looked quite promising in 2015. It also meant Snapdeal would gain a stronghold in the m-commerce space as it would be benefitted from FreeCharge’s mobile only users. The transaction, however, didn’t turn out to be a good one for Snapdeal.
Axis Bank acquires FreeCharge: This is how Snapdeal and Axis Bank will be benefitted!
Axis Bank acquiring FreeCharge for Rs. 385 crore shall give Snapdeal the much-needed cash to survive in the Indian e-commerce space. On the flip side, the deal will help Axis Bank to gain access to FreeCharge’s 50 million mobile wallet users. Also, the banking major will be able to use the brand value and patented technologies of FreeCharge.
After the Axis Bank FreeCharge acquisition deal news broke out, share prices of Axis Bank rose for a brief period of time. The stock price of Axis Bank opened at Rs. 532.40 on NSE today. It touched a high of Rs. 535 and a low of Rs. 523 so far!