Japanese investor SoftBank has cut the value of two of its largest startup investments in India – Ola and Snapdeal. SoftBank has written off a total of around US$550 million in the value of its shares in these companies, Livemint reported.
As a result of this markdown, the valuation of the companies in the domestic market will slide down as well.
Although the markdowns are a result of the appreciation of Japanese currency against other currencies, the panic button has been pressed as far as Ola and Snapdeal are concerned. The markdown comes at a time when both Ola and Snapdeal are facing pressure from their rivals – Uber and Flipkart respectively.
While both the companies raised significant funds between April and September 2015, this year both Ola and Snapdeal have not rustled up more capital due to a tough funding winter.
SoftBank has invested close to US$2 billion in India till now, and the majority of its funds, about US$1.3 billion, has been deployed in Ola and Snapdeal. SoftBank also has investments in hotel booking platform Oyo, grocery delivery app Grofers, and real estate classifieds player Housing.
SoftBank led a US$210million investment in Ola and US$627 million in Snapdeal in October 2014. It has also made follow-on investments in both firms.
SoftBank reported a loss of US$557 million in its consolidated earnings for the six months period ended September. The loss was mainly due to its investments in India. Of this, US$284 million loss was attributed to the year-on-year appreciation of the yen. Last year, the investor had reported a profit of US$1.08 billion.
The Japanese yen gained 10.2 percent against the US dollar till April this year.
Ola was valued at about US$5 billion after its previous funding round in November 2015, while Snapdeal’s valuation was pegged at US$6.5 billion in February this year.
Flipkart, which is India’s most valued internet company, has seen a series of markdowns from a valuation of US$15 billion to around US$9-10 billion.
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