Major Retailing Groups Vying for Jabong

BENGALURU: The race for acquiring the online fashion retailer Jabong.com continues to heat up as major retailing groups are in the fray to reach the stage of advanced negotiations. According to a report by Economic Times (ET), Jabong’s owners, German incubator Rocket Internet is keen to exit while the Swedish investment firm Kinnevik, which owns 21 percent of Jabong’s parent Global Fashion Group, is in search of a strategic investor.

Jabong has been scouting for a probable buyer for about a year now and has held talks with major online retailers like Snapdeal, Flipkart, Future Group, Aditya Birla Group owned abof.com and Alibaba, vying closely to seal the deal. According to the ET report, the asking price has been estimated to be between 250-300 Mn dollars, although the deal size is expected to be negotiable.

Although the speculations have been rife about the ongoing negotiations for the portal’s sale for quite some time, none of them have reached an advanced stage. With the Rocket Internet and Kinnevik executives actively camping in India to oversee the sale, the deal is expected to be closed within the next six months.

According to the ET report, Jabong’s falling revenues have been cited as a major trigger behind Rocket Internet’s decision to sell the e-commerce portal. There has been an estimated 7 percent drop in Jabong’s revenues to 869.1 crore rupees from the previous year. Meanwhile, the losses were trimmed to around 46.7 crore rupees from 159.5 crore rupees by limiting the discounts offered on the portal.

Another key attractive component of the deal is the accomplished top management that comprises of former Benetton India Managing Director Sanjeev Mohanty as the CEO and former eBay executive Muralikrishnan B as the Chief Operating Officer. Harminder Sahni, founder of Wazir Advisors, a retail consultancy, was quoted in the ET report elaborating on the brand value of the fashion portal. “I see merit in somebody acquiring and rebuilding brand because it is not easy to build brand awareness of that level in today’s time as nobody is going to fund that kind of money in brand building anymore,” he said. 

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