With the boardroom battle at Snapdeal not showing signs of resolution, SoftBank has pulled out of a funding deal with Snapdeal, as per a report in The Economic Times.
At a time when the company is in dire need of funds to get back on its feet, issues between its board members SoftBank, Kalaari Capital and Nexus Venture Partners is depriving the ecommerce major of a new lease of life it desperately seems to need.
According to a February 28 report by Moneycontrol, Snapdeal let go over half of its 4,300 staff strength as funds in the company came down to just $100 million.
While SoftBank, Snapdeal’s largest shareholder and investor wants to directly pump in money, Kalaari and Nexus were against this, as this would lead to a slip in their holding.
Moreover, SoftBank seems intent on selling off the company. It was in talks with both Flipkart and Paytm for a potential sale. “There was a term-sheet offering Snapdeal debt financing for a period of three years, which was, inexplicably, withdrawn within days, giving credence that SoftBank has made up its mind about selling the company,” sources told ET.
According to the ET report, Kalaari Capital and Nexus are ‘livid’ and are questioning the intentions of SoftBank.
SoftBank has two seats on the board and owns a 33% stake. Clearly, with an upper hand, SoftBank pulling out is a major blow for Snapdeal.
In a battle for market share in the Indian ecommerce market, Snapdeal has been struggling at a distant fourth position. It even revamped its logo and tagline to ‘Unbox Zindagi’ before the Diwali sales last year. But even a brand overhaul does not seem to have helped. Currently, it is desperately in need to funds to help it tide over. And a boardroom battle at a time like this is only adding to its woes.