After unsuccessful merger with Flipkart, Foxconn, one of the investors in Snapdeal has written down 80% of its $200 million investment in the Gurugram-based company. Foxconn’s holding company – FIH Mobile, who invested in Snapdeal recognised an impairment loss in the online marketplace.
Impairment occurs when a company sells or abandons an asset that is no longer beneficial. FIH Mobile had invested about $200 million in Snapdeal for a 4.07% stake in August 2015.
FIH Mobile recognised an impairment loss of $160 million related to its investment in Jasper Infotech, which owns and operates Snapdeal, the company said in a regulatory filing for the six-month period ended June 30.
“The post-impairment $40-million equity investment in JIPL represented 0.55% of the group’s total assets as of June 30, 2017,“ as per company’s statement mentioned in the Economic Times.
The write down came after Snapdeal’s founder didn’t agree for the buyout proposed by its largest shareholder- Softbank. Instead of acquisition, founders of the company chose to pursue independent path. Besides founder, other minority shareholders including Premji Invest opposed the acquisition offer.
Earlier in May, SoftBank announced that it had borne a loss of $1.4 billion on its investments in the online marketplace and Ola for the year ended March 2017.
Following the failed acquisition bid from Flipkart, Snapdeal is slated to go through write-offs and massive markdowns by its backers. Meanwhile, last week Softbank invested about $2.5 billion in Flipkart as it loses hope on Snapdeal.
The round was the biggest ever private investments in an Indian technology company, and it made Softbank one of the largest shareholders in Flipkart. Of late, Snapdeal has been struggling in every sense and this write-down by Foxconn is not a surprise for the company as well as any other individual.