India’s third-largest private sector lender, Axis Bank has acquired Jasper-owned digital wallet FreeCharge for an amount of $60 million in an all-cash deal.
"The bank has on Thursday (27 July) entered into a share purchase agreement with Jasper Infotech Private Ltd ('Snapdeal'), to acquire 100 per cent equity capital of Accelyst Solutions and Freecharge Payment Technologies (Accelyst and FPTPL collectively referred to as 'Freecharge'), subject to receipt of requisite regulatory approvals, including from the RBI, for a cash consideration of Rs 385 crore," it said in a regulatory filing.
The bank's managing director and chief executive, Shikha Sharma, told reporters that the agreement was signed earlier in the day and the deal is important from a strategic perspective for the bank.
Axis Bank's chief financial officer Jairam Sridharan said the acquisition will double the customer base of the bank and leapfrog its digital journey by multiple years.
He said the bank expects regulatory clearances to the deal in two months. Following this, the bank could consider merging their wallet businesses.
Freecharge presently has a revenue of about Rs 80 crore, he added.
The acquisition was also confirmed by the Freecharge’s co-founder Kunal Shah on his Facebook page. He said, “The choice we made (merger with Snapdeal) didn’t work out as planned for several reasons but super proud of what we achieved as a team and product. We grew 3x on almost all metrics post exit with low capital at hand. Happy about the news and wish FreeCharge a great success with Axis Bank."
In his Post, Shah, however, did not disclose the financial details of the transaction.
Jasper’s subsidiary Accelyst Solutions Pvt. Ltd owns and operates FreeCharge that provides online recharge and bill payment services. It also provides rewards by way of discount coupons from various brands in food, lifestyle, eCommerce, travel, and other sectors for transactions made through the website.
Snapdeal had bought Freecharge in April 2015 for an estimated $400 million or over Rs 2,500 crore at current rates. At that time, this was touted as the largest deal in the nascent start-up ecosystem in India.
Earlier, Freecharge was reported to be holding discussions with Paytm (One97 Communications).
However, the deal did not go through as the Alibaba-backed company was offering a much lesser price of about $15 million, one of sources said.
Acquiring Freecharge's business would give Axis Bank access to about 52 million mobile wallet holders of Freecharge as well as about 150 to 200 professionals.
With this acquisition, Axis Bank looks to strengthen its presence in the country’s burgeoning digital payments space.
The board of the Delhi-based company, Jasper Infotech has also approved the the sale of its troubled online marketplace Snapdeal, to rival Flipkart, estimated at around $900-950 million.