New Delhi: Online marketplace Snapdeal, which has been struggling to raise fresh funds, is in preliminary talks with two of its biggest rivals—Paytm E-Commerce Pvt. Ltd and Flipkart India—for a potential sale that could value the company at less than the total equity raised by parent Jasper Infotech Pvt. Ltd, according to three people aware of the development.

SoftBank, which has invested roughly $900 million of the $2 billion or so raised by Snapdeal, is leading the sale talks, the three said on condition of anonymity.

Since the talks are still at a nascent stage, SoftBank is expected to inject up to $50 million as bridge money till a deal is closed, one of the people said.

The potential sale that could value Snapdeal at less than the total equity raised by parent Jasper Infotech

The sale talks with Alibaba-backed Paytm E-Commerce are more advanced than with Flipkart, the people said.

Both possibilities have been aired before—the first for almost a year.

Mint learns that a team from Alibaba has repeatedly visited New Delhi to discuss the deal with Paytm, in which it has a stake.

The price being offered for Snapdeal is anywhere between $1.5 billion and $1.8 billion, two of the three people said.

Gurgaon-based Snapdeal had touched a valuation peak of $6.5 billion in its previous funding round in 2016.

A team from Alibaba has repeatedly visited New Delhi to discuss the deal with Paytm, in which it has a stake

There are deep investor links between Snapdeal and Paytm. SoftBank Group Corp. is the largest shareholder in Snapdeal, with a stake of close to 35%. Other large investors in the company include Kalaari Capital, Nexus Capital, and Alibaba Group. Alibaba is the largest investor in Paytm and, in turn, counts SoftBank as its top investor.

A Snapdeal spokesperson denied that the company is up for sale or that it has held talks with Paytm and Flipkart.

“Your information is incorrect and without basis. We are making decisive progress in our journey towards profitability and all our efforts are aligned in this direction," the spokesperson said in an email.

Paytm and Flipkart did not respond to Mint’s emailed queries. SoftBank declined to comment.

Your information is incorrect and without basis. We are making decisive progress in our journey towards profitability and all our efforts are aligned in this direction- A Snapdeal spokesperson

If a sale happens, it would be the biggest-ever in the Indian start-up business. Industry experts anticipate the sector to have room for only two or three large e-commerce companies (Amazon is assumed to be a fixture) in the long run.

Snapdeal, which has gone into cash-conservation mode, has, in the last three to four months, reduced staff, slashed discounts and minimized marketing spending.

Mint reported in February that Snapdeal had about Rs1,100-1,200 crore cash left in the bank, making it critical for the company to secure funds immediately.

The company’s cash position has crimped its ability to fight with Paytm E-Commerce, which recently secured $200 million from Alibaba Group, and Flipkart, which is in advanced stages of talks to raised a $1 billion round.

From the end of 2015, Snapdeal has bled market share to Flipkart and Amazon, and has slipped to a distant number three in the market.

The company’s loss more than doubled to Rs3316 core in the year ended 31 March 2016 even as revenue rose 56% to Rs1,457 crore.

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