InfoEdge has written off its entire investment in 4B Networks: a proptech startup led by Rahul Yadav, who formerly co-founded real estate search portal Housing.com. The reasons for the write-off are challenging funding environment.
The Noida-based internet group has written down Rs 276 crore in the company as it anticipates that raising fresh money for 4B Networks will be tough and its cash burn is unsustainable.
InfoEdge mentioned that impairment of Rs 276 crore was charged as an exceptional item in its Q3 FY23 results.
“..We are writing down the investment in light of the current state of the environment and the significant uncertainty towards funding options available to 4B in future,” said InfoEdge’s chief executive officer Hitesh Oberai during an analyst call.
As per Fintrackr’s data, InfoEdge has a 57.17% stake in 4B Networks via its subsidiary Allcheckdeals. The Mumbai-based company was valued at around $185 million or Rs 1,462 crore (post allotment) when it raised Rs 90 crore from Allcheckdeals in September 2022.
Two-year-old 4B Networks enables real estate developers and brokers to communicate with each other and conduct their business via the Broker Network Platform. The company claims to have more than 1,00,000 brokers on the platform and it has seen disbursal of home loans of over Rs 4,000 crore.
4B Networks is the third startup by Yadav which failed to fly after initial success. His first venture which was also in the proptech space eventually merged with PropTiger in a fire sale. For background, Yadav left Housing in 2015 after a spat between him and investors including SoftBank. At present, he has over 31% stake in 4B Networks.
After his exit from Housing, Yadav founded Intelligent Interfaces which shuttered operations in no time even after raising funds from Flipkart founders Sachin Bansal and Binny Bansal, Paytm founder Vijay Shekhar Sharma, Micromax co-founder Rahul Sharma and Yuvraj Singh.
Info Edge’s revenue from operations slipped 2.5% to Rs 589 crore during the third quarter of FY23 (Q3) from Rs 604 crore in the previous quarter. As per the unaudited financial statement of the company, its profits collapsed 50.6% to Rs 46.4 crore during the last quarter from Rs 93.9 crore in Q2 of FY23. The shrinkage in profits is mainly due to Rs 411.7 crore worth of provisions made by the company relating to the investment in 4B Networks.