Jabong’s possible sale has hit a roadblock

November 30, 2015 written by

Jabong’s possible sale has hit a roadblock due to valuation mismatch with potential suitors. The online retailer, which is part of Global Fashion Group (GFG), was put on the block by its largest investors Rocket Internet and AB Kinnevik with a $500-million valuation tag. However, sources said interested buyers weren’t keen on shelling out more than $250-300 million for the online retailer, which has been on a sticky wicket over the past few months as its financial performance slides rapidly.

The Alibaba-backed Paytm had entered into discussions for buying Jabong but the payments services firm has logged out of the race, sources with direct knowledge of the matter said. Online marketplace Snapdeal, too, is learnt to have opted out of acquisition talks with the e-tailer. Jabong, once considered to be a direct rival to Myntra, wasn’t able to double down on its competitor which was acquired by Flipkart last year. Out of the five founding members of Jabong, four have already left the company. The company’s ebitda losses, for the first six months of 2015, jumped by over 46% to Rs 227.4 crore compared to almost Rs 155 crore a year ago. This was primarily owing to heavy discounting to compete with rivals. In terms of getting adequate capital, Jabong has not been able to make much progress and it raised only $100 million last year. On the other hand, its competitors like Snapdeal and Flipkart have raised $1.6 billion and $3.4 billion, respectively.

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