<div>Eight months ago Kunal Bahl of Snapdea, met Kunal Shah of Freecharge at a coffee shop to discuss what would be the next step to stay ahead in the e-commerce industry. Yesterday, both of them joked with the media that they did not need a banker to seal the deal. <br /><br />The deal was signed with the aim of beating the competition and staying ahead in the e-tail race. "We chalked out the foundation and our small M&A team took care of the rest," says Kunal Bahl, founder of Snapdeal, along with Kunal Shah of Freecharge. There will be some accounting and shareholding patterns to sort out because Freecharge is part of Accelyst Solutions Private Limited, which will now be the subsidiary of Jasper Infotech, the company that owns Snapdeal. However, the synergies of the deal are evident and there may be some push from the Softbank team, the Japanese telecommunications and internet giant, run by business tycoon Masayoshi Son, in driving the consolidation. </div><div> </div><div>Snapdeal is backed by Softbank which put in $627 million in 2014 itself while it also has a 37 per cent stake in China’s e-commerce giant Alibaba. Ali Baba has invested in PayTM, which competes with Freecharge. Clearly the message is to take on Flipkart and Amazon in India. Now all eyes will certainly be on PayTM, Freecharge's competition, and their their fund raising plans. The larger question is will they be up for consolidation with a suitor now?.</div><div> </div><div>Softbank has invested $627 million in Snapdeal last year. They also have a 32 per cent stake in Ali Baba, the Chinese online market place, which has invested $575 million in One97Communications which is the parent company that owns PayTM.</div><div> </div><div>Why was Freecharge important? Its revenues could be around $8 million (the company does not disclose its revenue and does not confirm the number) and since it did not have a e-commerce play like PayTM, it makes absolute sense for Snapdeal to acquire it. But with Softbank in the helm of things, in Snapdeal (which now owns Freecharge) and in PayTM (through Ali Baba) we at Businessworld believe that the payments industry is clearly heading for big consolidation phase.</div><div> </div><div>Freecharge has 20 million registered customers and 3 million active users who regularly pay their mobile and DTH TV bills on the platform. In return Freecharge offers users coupons which can be redeemed at their favourite restaurants and cinema halls. This also included a percentage of the payments that could be availed as cash back offers. Through the Freecharge platform Snapdeal has access to a younger customer, who is between 18 and 25 years of age, and they can cross sell deals on the market place through Freecharge. Rumours are ripe that it was a 80 per cent stock deal and that 20 per cent was paid in cash. Kunal Bahl says that majority of it was a stock deal. Newspapers value the deal size to be Rs 2,800 crore or $420 million. </div><div> </div><div>Sources also add that Kunal Shah is richer by Rs 80 crore, in cash, after this current deal. Sources also say that his business is now valued at 50 times its revenue in dollar terms.</div><div> </div>
