Deal dynamics

• ? The sale price is huge markdown for Snapdeal, which acquired payment wallet FreeCharge for $400 m in 2015

• ? The deal will help the third largest private sector lender to double the customer base and address the digitally savvy people

• ? FreeCharge clocked revenues of Rs 80 crore last year, and has a gross merchandise value of Rs 2,700 crore. Its 200 employees will be retained by Axis Bank as part of the deal

MUMBAI (TIP): After nearly a year of scouting for a buyer, struggling ecommerce firm Snapdeal today agreed to sell its payment wallet FreeCharge to Axis Bank for Rs 385 crore, almost 90 per cent lower than what it had paid for the firm in 2015.

The price paid by the third largest private sector lender for the acquisition — which will help it double the customer base and address the digitally savvy people — is also higher than what was reportedly offered by other suitors.

According to some reports, others were offering $15-20 million for FreeCharge, which was acquired by Snapdeal for $400 million in 2015 during heady days for the e-commerce sector in the country.

Rival e-commerce company and wallet Paytm had made an offer $10-20 million for FreeCharge, while Amazon also made a late bid for the digital payments platform.

From business as well as value addition angles, the deal does not make much sense as other banks have been going slow in investing in wallets after the RBI-promoted National Payments Corporation has launched UPI and IMPS applications.

Echoing similar views, Sandy Shen, a research director at Gartner, said, “Though the acquisition will give Axis Bank a jump-start in customer acquisition, whether the bank can keep growing that number is a question.”

“Digital wallet is a highly competitive space with dozens of players and it takes lots of efforts and resources to increase merchant acceptance and offer good services, which is key in winning over the customers,” he said.

Stating that it is difficult to put a price tag for such buys, Axis Bank MD and Chief Executive Shikha Sharma said, “What we are excited about is its tech platform, its capabilities, customer base and the brand. We’d certainly like to continue with the brand.”

The announcement comes at a time when sale of parent Snapdeal to Flipkart is in the final lap and will give it headroom. “This is a win-win deal that allows Snapdeal to further focus on our core e-commerce business, while giving Axis Bank some of the most agile and innovative capabilities in the financial services space,” Kunal Bahl, Snapdeal co-founder and chief executive, said in a video call. Source: PTI

Axis Bank boss gets 3-yr extension

? Seeking to rest speculation, Axis Bank on Thursday re-appointed Shikha Sharma as the managing director and chief executive of the third largest private lender for a third term that will last till June 2021 ? “The board, at its meeting held on Wednesday, approved the re-appointment of Shikha Sharma as the managing director and chief executive of the bank for three years, with effect from June 1, 2018,”the bank said.

? The unusual announcement comes over 11 months ahead of the 59-year-old banker’s current term. The veteran banker is serving the second term that comes to an end in June 2018. She joined Axis Bank in 2009 with a five-year mandate which was subsequently extended

? A section of the media had first reported appointment of an executive search firm by the bank to find her successor, which was followed by another report that Tata Sons sounded her out with an offer