New Delhi based Indian e-commerce platform Snapdeal which is backed by Japanese investment holding company Softbank Group Corporation on Tuesday has filed draft papers for an initial public offering (IPO) at the Indian stock market.
Snapdeal who once rivalled the Amazon and Flipkart in the Indian e-commerce market seems to change it strategy according to the new reality. Snapdeal currently has 71 investors of which Softbank owns about 35% of the stake in the company. And now the company plans to sell it's shares to raise upto Rs.1,250 Crores.
According to the draft red herring prospectus (DRHP) filed by the company with the Securities and Exchange Board of India(SEBI) the company intends to sell upto Rs.250 Crores shares to the financial institutions in a pre-IPO placement and will use Rs.900 Crores of issue proceeds to finance it's organic growth and rest will be used for the general corporate purposes. The company's shares will be listed at both the National Stock Exchange(NSE) and Bombay Stock Exchange(BSE) in the Indian stock market.
The IPO can be a turning point for the company as the company has already lost it's much of the urban market to Flipkart and Amazon and was forced to re-think it's strategy and now it is targeting tier-II, tier-III cities along with the rural India for it's market growth.
But we also must not forget that what happened to Paytm after listing on stocks as it seen it's shares dip by a major chunk after listing signalling that Indian stock market is still very volatile. But most experts says that it was mainly due to that Paytm overvalued itself and that is not the case with Snapdeal but Snapdeal does not have a consumers trust which can be a problem so what future has for Snapdeal will be interesting to see.