Snapdeal is finally selling off FreeCharge, its mobile transactions platform, to private sector Axis Bank. The bank said in a communication to the Bombay Stock Exchange that it has entered into a share purchase agreement with Jasper Infotech Private Ltd, Snapdeal parent, to acquire 100 percent equity in FreeCharge for a consideration of Rs 385 crore.
But interestingly, now the deal is happening at just Rs 385 crore. So is Snapdeal selling FreeCharge for a song? Not really, aver analysts for they reason that the price at which FreeCharge was acquired by Snapdeal was ‘unrealistic’.
The price paid by Snapdeal for FreeCharge was a ‘lot of money even then’, said Sanchit Vir Gogia, Chief Futurist, Founder & CEO, Greyhound Knowledge Group. “That was an inflated price for FreeCharge then and I expected the valuation to drop,” he said.
When a company is being sold for one-sixth of the price at which it was bought, it means there was some ‘gross miscalculation’ about its valuation, Gogia said.
Gogia feels that Rs 385 crore is the ‘right’ price for FreeCharge now. “This is the real price of FreeCharge,” he said.
The sale price of FreeCharge is a good wake-up call for the startup ecosystem, founders, investors and those planning to buy similar startups, said Gogia. “Me-too products cannot survive and consolidation is the name of the game. Even Paytm had to turn into a bank to be successful,” he said.
The card space is getting obsolete not just in India but also worldwide. With the government encouraging digital payments and with UPI and the BHIM app, the sector is going to do well, said Gogia.
Copyright © 2017 Greyhound Knowledge Group. All rights reserved. You may share this research note using the options made available. Please don’t copy this research note (complete or parts) and distribute over the web and emails. Connect with us if you need clarifications.
Have a question on this or other technology and innovation topics? Wish to understand what this means for your business? Click here to engage with a Greyhound Research Analyst.
Like this insight? Sign up for our newsletter to get our latest insights.
Wish to read more such Insights That Inspire? Access scores of other Free, Freemium and Premium Insights from the menu above.
Analysts:
Sanchit Vir Gogia: Sanchit is the Chief Futurist, Founder & CEO of Greyhound Knowledge Group, a Global Strategy & Transformation Research, Advisory & Consulting Group. He also serves as Chief Analyst & CEO of Greyhound Research, a Global, Award-Winning, Independent Technology & Innovation Research, Advisory & Consulting firm. To read more about him, click here.
Note for IT Decision Makers – Join Our Exclusive Community! Greyhound Research values your opinion and invites IT Decision Makers and Business Leaders involved in IT projects to join our exclusive, invite-only Greyhound Golden Gate (GQube) Councils. If your project is exclusive and we have your permission, we will write a research note about you and share it with the larger community. Over and beyond, this also gives you access to some of our thought-leading research and analysts. Please write to us on connect@greyhoundgroup.com and we’ll take it further from there!
Note for IT Vendors, Telecom Operators and Channel Partners – Did you see our Research Agenda? We have organised all of our insights in a way that allows you to better filter and read what works best for you. Please write to us on connect@greyhoundgroup.com and we’ll gladly share a copy of the research agenda with you.