Axis Bank Buys FreeCharge For Rs 385 Crores
Axis Bank penetrates the market of mobile wallet users with its purchase of digital payment platform FreeCharge owned by Snapdeal. The 385 Crore Rupee acquisition gives Axis Bank access to 50 million mobile wallet users along with the FreeCharge’s tech team and patented technologies.
Axis Bank expands its existing merchant network with 433000 point-of-sale machines by another 200000 merchants through this purchase. “The acquisition of FreeCharge re-affirms Axis Bank’s determination to lead the journey of digitization of financial services”, said Shikha Sharma, chief executive of Axis Bank.
KaroBargain provides a look at FreeCharge’s history
FreeCharge is an e-commerce website that also offers a digital payment platform. It was founded by Kunal Shah and Sandeep Tandon in August 2010. Snapdeal acquired the firm in one of the biggest take overs Indian e-commerce sector has witnessed for about $400 million in 2015. Snapdeal brought on board Jason Kothari in the capacity of FreeCharge’s new CEO in March 2017.
It is to be noted that Snapdeal itself is in the final stages of the much-hyped merger with longtime rival Flipkart. Struggling e-commerce firm Snapdeal put FreeCharge up for grabs after failed attempts at fundraising. This comes at a time when the mobile wallet industry is experiencing a huge surge boosted by the government’s Go Cashless initiative.
Axis Bank thwarts mobile wallet leaders like Paytm and PayPal
KaroBargain has been tracking developments of this deal since December 2016. Top companies like Amazon, Airtel Pay, Mobikwik, Paytm and PayPal have been trying to acquire the firm. Paytm almost landed the deal with the signing of a non-exclusive term sheet in May. It offered an all cash deal of $45-90 million for the acquisition, but the deal fizzled out at the last moment.
Axis Bank emerged as the highest bidder of the auction thwarting other bidders. Axis Bank takes KaroBargain seriously and has bargained its way into the deal for Rs 385 Crores. It is a significant fall from the price Snapdeal originally bought FreeCharge for in the year 2015. This deal is subject to regulatory approvals from the Reserve Bank of India and is expected to be concluded by the end of September 2017.
Another feather in Jason Kothari’s cap
Jason Kothari facilitated this deal in just 4 months since he assumed office as the Chief Executive Officer of FreeCharge. It is yet another achievement in his career after turning around two firms from bankruptcy. Post the deal Kothari will step down from the position and continue with FreeCharge’s parent company Snapdeal as its Chief strategy and investment officer.
Speaking of the deal Jason Kothari said: “FreeCharge brings with it immense technology and product expertise, the synergies catalysed by this acquisition sets the stage for further innovation and accelerated adoption of digital payment solutions in India”.
Closing the deal
Axis Bank aims to keep the digital payment platform as a separate entity and retains its 200 member team and also promised to keep FreeCharge as a separate entity.