Snapdeal, the online e-commerce platform, is reportedly in talks with PayPal to sell the online payments platform Freecharge, which it acquired a couple of year ago.
As per the sources of Economic Times, the sale of the company could be valued at $500 million. Notably, Snapdeal acquired Freecharge for approx. $450 million in 2015.
This news comes at a time when Snapdeal is struggling to keep its business afloat and has not been able to raise a new funding round. The situation is so worse that it laid-off around 600 employees, few executives decided to take pay cut, and founders decided to take 100% cut of their salary.
The sale of Freecharge could give the much needed boost in terms of finance to the struggling e-commerce company. As per the company, it has taken steps to minimise cash burn and aims to achieve profitability in the next two years.
FreeCharge recently underwent a senior management reshuffle. The latest blow came in the form of its chief executive Govind Rajan, who parted ways with the company after just nine months.
The responsibilities of Govind Rajan have been handed over to Jason Kothari who recently joined Snapdeal after his stint as CEO of Housing.com. He will now oversee the overall development of FreeCharge’s 192 million users strong wallet service.
Earlier, it was reported that PayPal was in talks with Snapdeal to acquire 25 percent stake in Freecharge. However, the company denied any such developments. It was at the time when PayPal filed trademark infringement case against Paytm — the biggest rival of Freecharge.
If Freecharge gets acquired by PayPal — the leading payments platform globally, it could heat-up competition in the online payments industry in India that has received a boost in recent weeks with the government’s boost towards a cashless economy.
Kunal Shah and Sandeep Tandon formed Freecharge in August 2010. The startup has so far secured funding from Sequoia Capital, Tybourne Capital Management and San Francisco-based Valiant Capital Management. However, Snapdeal acquired the payment platform in April 2015 for roughly $450 million.