The development comes at a time when SoftBank, one of the biggest investors in Indian start-ups, is trying to sell Snapdeal to bigger rival Flipkart for about $1 billion.
The valuation loss disclosure was made by SoftBank in its annual report for the year ended March 31, 2017. Valuation has been a roadblock for the proposed merger of Snapdeal with the country's largest e-commerce player Flipkart. NVP has been an early investor in Snapdeal.
Earlier news agency PTI had reported that Softbank, Japenese investor in Snapdeal, was close to getting approval from its partner investor Nexus Venture Partners for Snapdeal's sale to Flipkart. But things may change now, said analysts.
SoftBank said it suffered a loss of United States dollars 1 billion (Rs 6,500 crore) on its investment in Snapdeal, nearly matching the money it has put in the home-grown marketplace during 2016-17. Ltd, which runs snapdeal.com, an e-commerce site in India, and ANI Technologies Pvt. Since August 2013, SoftBank has invested close to $900 million in Snapdeal, which was seen as a prime contender to take on Flipkart and Amazon in India. With intense competition from deep-pocketed global rivals like Amazon, companies like Flipkart and Snapdeal could face more heat in the coming days.
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Investment bank Credit Suisse, which helped Snapdeal raise funds in 2014, is representing Snapdeal in the proposed deal with Flipkart. The Masayoshi Son-led Internetto- telecom conglomerate's latest write-off follows SoftBank's announcement in February of a $350 million loss on its investments in both Snapdeal and Ola.
As per the agreement, Snapdeal founders are expected to get $15million each from the deal where as Nexus Venture partners would get around $50 million to $60million.
Japan based SoftBank which has raised a revenue of $2 billion into minority stakes in Indian e-commerce business over the last few years is pegging at more stakes. Its net loss was at Rs 1,328 crore. On the other hand, Ola, which rivals Uber Technologies Inc, has managed to raise only about $350 million after hitting a fundraising trail in June past year, with SoftBank alone putting in about $250 million.
Further explaining the cause of the losses, SoftBank announced that it recognised loss on valuation of shares of subsidiaries and associates including STARFISH I, an intermediate holding company which owns preferred shares in Snapdeal, of $1billion (¥114.059 billion), in 2016-2017.