Japanese private equity giant Softbank said on Wednesday that it wrote down 160.42 billion yen ($1.41 billion ) in value of its financial instruments relating to its investments in India’s Snapdeal.com, and ANI Technologies Private Limited, which operates the taxi booking platform Ola, for the fiscal year ended March 31, 2017.
The company delivered a net profit for the financial year that came in the above estimates. It had recorded a gain on financial instruments at FVTPL (fair value through profit or loss) of 114,377 million yen ($1.01 billion) in the previous fiscal year.
Softbank wants to sell Snapdeal to Flipkart and also to buy up additional shares from Tiger Global (an early Flipkart backer) to have a significant holding in the company
Softbank is the biggest investor in Snapdeal, owned by Jasper Infotech, which is in sales talks with Flipkart. The sale reported by FactorDaily comes with a valuation of $950 million, which will force many Snapdeal investors to take a haircut. The e-commerce company has seen dwindling numbers in terms of sales and merchants and a deal is expected soon.
Softbank wants to sell Snapdeal to Flipkart and also to buy up additional shares from Tiger Global (an early Flipkart backer) to have a significant holding in the company. For Softbank, whose Indian investments haven’t really paid off, this deal is a silver lining.
ANI Technologies-owned Ola, India’s largest cab-hailing application, has seen mounting losses as it battles US giant Uber for dominance in India. the company reported a seven-fold increase in revenue, but at the same time incurred a loss of Rs 2,313.66 crore ($358.01 million).
The Japanese company, which was an early investor in Alibaba, reportedly views India as a country where the next one or two Alibabas will come from
The company had previously written down as much as 58.1 billion yen ($555 million) in the same companies for the six-month period ending September 30, 2016.
SoftBank is also reported to be close to infusing cash worth more than $1.9 billion into Alibaba-backed digital payments firm Paytm. There have also been reports of a potential deal for Alibaba pay systems to be included with those of the combined entity if the deal between Snapdeal and Flipkart was to go through. This could in turn mean a stronger opposition to Amazon India.
The Japanese company, which was an early investor in Alibaba, reportedly views India as a country where the next one or two Alibabas will come from. This writedown may well represent the final steps in it restructuring and repositioning itself to get in line with that goal.
Updated on May 10 at 7.35pm to correct two typos.
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