Snapdeal, the SoftBank- and eBay-backed online commerce company in India, has completed what it called “one of the biggest acquisitions in the history of the internet industry in India” after it announced the acquisition of online transaction service FreeCharge.
The companies are not disclosing a price, but the Economic Times, which first reported on an impending deal last month, previously pegged its valuation at $450 million. If correct, that would surpass Snapdeal rival Flipkart’s purchase of Myntra last year, which we understand was $330 million.
Snapdeal said FreeCharge will continue to “function as an independent platform and all aspects of [its] shopping experience will remain intact,” though it plans to extend the integration between the two services.
FreeCharge is a service that rewards users with coupons when they top up their phone credit or pay utility bills. It claims more than 15 million users in India — it recently raised an $80 million Series C and counts Sequoia Capital among its investors. (In total, it raised $115 million.) FreeCharge is particularly interesting because a high proportion of its business comes from mobile devices (85 percent), while more than half of its customers have payment cards associated with their accounts — making them ripe for conversion into regular Snapdeal customers.
That focus on mobile makes the deal a potentially key one for Snapdeal, which is battling Flipkart and Amazon for supremacy in India’s e-commerce market. Sales of smartphones in India doubled from 156 million units in 2013 to 364 million in 2014 — that growth is set to continue and take India past 500 million internet users in the coming few years, the bulk of whom will be on mobile devices.
Given the promise of the market, India’s top e-commerce firms are raising funding and expanding their services to capture larger chunks of the market and position themselves to take advantage of the growing audience of internet-connected consumers.
Amazon pledged $2 billion to grow its business in India, while Flipkart and Snapdeal both raised significant rounds of funding from investors last year. Snapdeal has spent some of its capital on a number of acquisitions of late — including loan service Rupeepower, recommendations platform Wishpicker and luxury goods marketplace Exclusively. Each one, however, has been kept undisclosed, just like the SnapCharge deal.
Mobile payments are becoming a key battleground as India’s e-commerce leaders mature, and earlier today MobiKwik landed $25 million from a string of investors that included American Express and Cisco. The company is aiming to reach 100 million registered users of its mobile wallet by next year, and is targeting a $100 million Series C round for the second half of this year.
Finally: Credit is due to both Snapdeal and FreeCharge for the way they playfully revealed their deal on Twitter: