SoftBank marks down India's Ola, Snapdeal by $1.4b

In its annual financial report the Japanese conglomerate announced that the loss came from “financial instruments at fair value through profit or loss (FVTPL),” which includes the two companies. The same category recorded a gain of JPY114 billion the previous year, but a loss of JPY58 billion for the six months ended September 2016.

The report comes as SoftBank is reportedly leading negotiations for a proposed sale of Snapdeal to Flipkart, its largest domestic rival. Both companies have struggled over the past year, with Flipkart enduring a series of widely reported markdowns by US-based mutual funds along with a number of senior management departures. They also continue to burn cash through subsidies used to lure customers away from each other and from US-based rival Amazon.

However, while Snapdeal has not raised a new round of funding since February 2016, Flipkart is showing signs of renewed strength. The company recently raised a new funding round of $1.4 billion from Microsoft, eBay and China’s Tencent Holdings, valuing it at $11.6 billion. Though this valuation is a decline from its high of $15 billion, investor confidence has also been buoyed by an agreement with eBay to take over the US-based auction site’s India business.

Ola also confirmed a down round in recent weeks, reporting in April that it had raised INR16.75 billion ($259 million) at a pre-money valuation of about $3 billion, down from $5 billion as of its previous round in 2015. That round was led by SoftBank, with another INR6.7 billion committed later at a slightly higher valuation by Falcon Edge Capital and RNT Capital Advisors, a VC fund backed by Ratan Tata, chairman emeritus of the company that controls Tata Group.

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• Topics
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• Softbank