Private sector lender Axis Bank Ltd
is nearing a deal to buy digital payments platform Freecharge for Rs 350-400
crore in cash, giving much needed breathing space to Freecharge parent company
Snapdeal, which is separately in talks to sell itself to larger rival Flipkart.
By buying Freecharge, Axis Bank
will get a popular digital payments brand as well as access to high-quality
technology that traditional companies typically struggle to build compared with
internet start-ups. Freecharge had also held lengthy talks with Paytm
(One97 Communications Ltd) but chose to go with Axis Bank as the bank offered a
higher price.
The sale of Freecharge will mark
the most stunning collapse in India’s start-up world, even more so than that of
its parent company, which has seen its fortunes dip since the start of 2016.
Snapdeal bought Freecharge for $400 million in April 2015 in what was then the
largest start-up deal in India. Last year, Freecharge hit the market to raise
funds separately. Until late January, Snapdeal was confident Freecharge would
raise fresh capital at a valuation of $700-900 million.
The Snapdeal founders, and venture
capital (VC) firms Nexus Venture and Kalaari Capital have been locked in a
boardroom battle that has resulted in Snapdeal and Freecharge passing up
funding deals, cutting jobs and being forced to seek buyers. SoftBank disagreed
with the others over the firm’s valuation in a potential sale or funding round.
