Bank of Baroda to buy Snapdeal’s e-wallet Freecharge
Bank of Baroda to expand its mobile wallet service, by acquiring FreeCharge. This shall get them access to millions of young customers that are on Freecharge platform.
For those who do not know, FreeCharge is an e-commerce website, which provides online facility to recharge any prepaid mobile phone, postpaid mobile, DTH & Data Cards in India. In April 2015, Snapdeal acquired Freecharge in what is being referred to as the second biggest takeover in the Indian e-commerce sector so far.
The mobile wallet firm FreeCharge is in talks with Bank of Baroda (BOB) and Times Internet besides larger rival Paytm for an all-cash acquisition, according to people who are aware of the development. The deal size is expected to be in the range of 60-75 million USD.
While it is learned that a non-binding and non-exclusive term sheet has been signed with Paytm, there wasn’t any immediate clarity on the position of the other two firms.
“All the three are the frontrunners for the deal,” said one of the persons quoted above.
FreeCharge was acquired by e-commerce Snapdeal for USD 400 million. A valuation of USD 60-75 million will be a major setback for the beleaguered e-commerce firm. The development comes at a time when Snapdeal is itself in talks for a stake sale with rival Flipkart.
The deal, if successful will allow Bank of Baroda to expand its mobile wallet service, it launched last year and also to get access to millions of young customers FreeCharge has on its platform. Bank of Baroda launched its own mobile wallet M-Clip last year.
On the other hand, for Times Internet, a mobile wallet addition to its portfolio could bring addition opportunities to monetize in the bill payments and online shopping space with regards to its existing ventures such as IndiaTimes Shopping, Gaana and Cricbuzz etc.
“The company can try and make small-ticket purchases on its platforms such as a song pack easily available through a wallet. The customers are not usually comfortable and willing to use debit or credit card that involve two-factor authentication for making low ticket online purchases,” said a person quoted above. An email to Times Internet and Bank of Baroda did not elicit any response.
Negotiations are on to ensure that the 200-250 employees of FreeCharge are also absorbed by the firm that acquires the company. It had risen close to USD 116 million before it got acquired by Snapdeal.
Moneycontrol reported earlier this month that Snapdeal had signed a non-binding letter of intent with Flipkart for the deal. Currently, the due meticulousness of Snapdeal is underway.
Founded in 2010, FreeCharge has had multiple suitors in past too including Naspers-backed PayU. The deal couldn’t be finalized due to lack of consent within the board of Jaspers Infotech, the parent firm of Snapdeal, according to one of the persons quoted above. FreeCharge struggle with its larger rivals Paytm and Mobikwik in the mobile wallet space. Some of the key merchants on its platform are IRCTC, Foodpanda, Swiggy, Zomato, Mcdonalds, Shoppers Stop and Pantaloons among others.