Snapdeal has announced sale of mobile payment wallet FreeCharge to Axis Bank for Rs 385 crore.
New Delhi: The sale of Freecharge to Axis Bank will provide Snapdeal the "necessary boost in resources" to continue its e-commerce journey, Snapdeal CEO Kunal Bahl said.
Just hours after the deal was announced, Bahl wrote to employees seeking to assuage concerns saying Axis Bank intends to not just retain all Freecharge employees but also "invest significantly" in the team and brand.
"Every new beginning comes from some other beginning's end. Building Freecharge has been a tremendously enriching experience for us. And now, it is time for us to focus our energy and passion on continuing the Snapdeal journey," Bahl said.
His comments also assume significance amid reports that the Snapdeal board is leaning towards selling the e-commerce company to Flipkart. Snapdeal has announced the sale of the mobile payment wallet to Axis Bank for Rs 385 crore (about USD 60 million), which is seen to be about 80 per cent lower than the USD 400 million it had reportedly paid to buy Freecharge in 2015.
Bahl said the transaction with Axis Bank was "a great outcome".
"They intend to retain entire team (and build on it), invest behind the brand and leverage the world class technology platform to the fullest," he said. He added that the leadership team of Axis Bank is committed to the digital payments space, and is willing to invest significantly behind it.
Bahl said with factors like availability of affordable smartphones and data prices as well as better infrastructure, Snapdeal has "an opportunity of a lifetime", which it "must seize".
"With the massive revolution happening in our country in the realms of very cost effective data, affordable smartphones, a unified GST tax regime, better infrastructure and rising income levels, there is no better time to be in
this business," he said.
There have been reports that suggest that Bahl and co-founder Rohit Bansal are trying to convince the Snapdeal Board to go for an alternate plan, instead of selling the company to Flipkart.
The alternate plan, as per reports, is to trim Snapdeal further and continue operations on a lighter scale. The discussions for sale with Flipkart have been on for five months now, driven proactively by Snapdeal's largest shareholder and Japanese conglomerate, SoftBank.
In another mail, Jason Kothari, the current CEO of FreeCharge, sought to assure employees that the mobile wallet would continue to operate as a standalone business.
"I'm thrilled to say, in the case of Axis Bank, FreeCharge will continue to operate as an entrepreneurially run standalone business, and the business will retain the 'FreeCharge' brand, technology and full team," he wrote.