In a notification to the stock exchanges, Axis Bank Ltd on Thursday said that it has entered into a Share Purchase Agreement with Jasper Infotech Private Limited, the owner of Snapdeal, to acquire 100 per cent equity capital of Freecharge for a cash consideration of Rs 385 crore, almost 90 per cent lower than what Snapdeal had paid for the firm in 2015.
Commenting on the acquisition, Axis Bank CEO Shikha Sharma said, "The acquisition was a strategic fit. The platform is a good quality one and we felt the value we paid was good. The deal is important from a strategic perspective for the bank."
Snapdeal is also looking at selling its e-commerce business and has been engaged in discussions with larger rival Flipkart for the past few months.
The Delhi-based firm had bought Freecharge IN 2015 for an estimated $400 million or about Rs 2,500 crore. At that time, this was touted as the largest deal in the nascent start-up ecosystem in India.
Earlier, Freecharge was reported to be in discussions with Paytm for a sell-off.
However, the deal did not go through as the Alibaba- backed company was offering a much lesser price of about USD 15 million, one of the sources said.
Acquiring Freecharges business would give Axis Bank access to about 50 million mobile wallet holders of Freecharge as well as about 150-200 professionals.
Post demonetisation, there has been a strong growth in usage of digital payment channels, including mobile wallets.
Industry watchers said it would be interesting to see how Axis Bank integrates Freecharge as it already has its own mobile wallet, Lime.
Axis Bank had earlier reported a 16 per cent year-on-year decline in its June 2017 quarter net profit at Rs 1,306 crore. However, the lender said it expects better days ahead as non-performing assets have peaked.
For Snapdeal, the transaction would provide it the much-needed cash, giving it a breather for a few more months, industry watchers said.
The turnaround in the fortunes of Snapdeal seems to have also had a drastic effect on FreeCharge that has seen a fall in the volume and value of transactions on its platform, they added.
(with inputs from PTI)