Major Indian e-commerce players Flipkart, Snapdeal, Alibaba and Aditya Birla group's Abof.com are in the race to acquire Jabong, an Indian fashion and lifestyle e-commerce portal. The initial rounds of talks are on as owners AB Kinnevik, a Swedish investment firm, and Rocket Internet are looking to sell the company and exit India operations.
The owners are reluctant to pump in more capital into the e-commerce firm.
The firm has been holding talks with potential buyers for the sale process and hope to close the deal in six month's time, Mint reported.
The value of the deal is expected to be between $250 and $300 million.
"Jabong has held talks with these four companies over the past few weeks. While none of the negotiations has reached an advanced stage, the deal size could be around two times its annual sales," a source was quoted as saying by the Economic Times.
The Gurgaon-based e-commerce portal, which is owned by Global Fashion Group (GFG), initially held discussions with Amazon, but the talks reportedly fell through in the initial stages.
By the end of May, Jabong has reported a 14 percent increase in revenue to €32.8 million during the March quarter. Jabong's earnings before interest, taxes, depreciation and amortisation loss reduced to €11.9 million from €16.3 million during the same quarter in the previous financial year (2014-15).
Four months ago, the loss-making firm received funding of Rs. 2 crore to help it remain afloat. Oliver Samwer, CEO of Rocket Internet and deputy chairman at GFG, was reportedly not in favour of continuing its India operations. However, Kinnevik insisted on backing the company and the board finally agreed to infuse the amount into Jabong.
Major e-commerce players Snapdeal, Flipkart, Amazon India have reported losses for the financial year 2014-15. According to a report in the Indian Express, Snapdeal recorded losses worth Rs. 1,328.01 crore. Amazon India's clocked Rs. 1,723.6 crore and Flipkart reported losses of Rs. 2,000 crore. On the other hand, Jabong, in a filing with the registrar of companies, posted a loss of Rs. 43.6 crore as against sales of Rs. 1,082.9 crore.
In the last few quarters, e-commerce retailers have brought down discount levels as investors are increasingly pressurising firms to turn profitable. "InJanuary-March, we have reduced our discount levels by 10 per cent to 15 per cent and in the October-December quarter, we had reduced discount levels by around 6 per cent. Women and footwear categories discount levels have declined sharply," Sanjeev Mohanty, chief executive officer of Jabong, had told the Indian Express in March.
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]