Softbank move comes in at a time when both Ola and Snapdeal are looking to raise fresh funds to sustain amid growing competition from rivals.

1. wwww.etailingindiaexpo.com
Softbank Groupwrites off$555 millionin Ola,Snapdeal investments
Softbankmove comesinat a time whenbothOlaand Snapdeal are lookingtoraise freshfundsto
sustainamid growingcompetitionfromrivals.
#DigitalErra Thought Corner
Japan’sSoftbankCorphas writtenoff investmentsof USD555 millioninIndiancab-hailingcompanyOla
and e-commerce majorSnapdeal,saysanarticle inThe Mint todaysayingSoftbank’shalf-yearlyearnings
report.
The bank's resultsreportquotedchangesinfairvalue of preferredstockof financialassetsincluding
those at twoof itsbiggestIndianassets.
In a statement, the company explained:
Gain or loss arising fromfinancialinstruments atFVTPL(fair valuethrough profitorloss) comprises
mainly changes in fair valueof preferred stock investmentincluding embedded derivatives, such asANI
Technologies Pvt. Ltd and JasperInfotech PrivateLimited in India, designated asfinancialassetsat
FVTPL.

2. wwww.etailingindiaexpo.com
Its effecton Ola and Snapdeal
SoftBankleda $210-millioninvestmentinOlaand$627 millioninSnapdealinOctober2014. Ithas also
made follow-oninvestmentsinbothfirms.
The write-off meansasignificantblowtoOlaandSnapdeal asthe businessesconstantlyrequire fresh
fundsto maintainoperationsandcounterthe toughcompetitiveenvironment.ReportssuggestOlahas
alreadybeenonthe lookouttoraise USD 300-400 milliontofightoff rival Uberthathas relativelybetter
financial war-chest.
AfterUber lostto Didi ChuxinginChina,ithassteppedupitsfocuson winningIndiaandhaspledgedto
investasubstantial portionof the $3.5-billionitraisedfromSaudi Arabia'sPublicInvestmentFundinthe
monthof June.Ola’svaluationhad peakedat$5 billion.
Snapdeal,too,hasbeenfacingexcessivepressuresholdingonitsmarketshare.A toughbattle between
AmericangiantAmazonandFlipkarthaspushedSnapdeal downtonumberthree position.Snapdealwas
valuedat$6.5 billionwhenitraised$200 millionledbyCanada’sOntarioTeachers’PensionPlanin
Februarythisyear.
SoftbankonMonday announcedsecondquarterresultspostingaprofitof roughlyUSD 5.1 billion
helpedbyafavorable exchange rate andhealthyoperationsinthe home marketJapan.
Conclusion
SlowfundingenvironmenthadforcedSnapdeal toshutdown'Exclusively',itsonlineplatformfor
premiumandluxurybrandstoavoida cash crunch. Earlierthisyear,Flipkarttoosufferedasimilarfate
wheninvestorssuchas Morgan Stanley,TRowe Price,Valic,VanguardandFidelitymarkeddownthe
value of theirstake inthe companyby nearlya third.The company’svalue fell fromapeakof $15.2
billionto$9-11 billion.
It is not clear to ascertain the exactvalueof both Ola and Snapdealafterthemark-down by SoftBank
since the firm did not break outindividualdetails of the drop in fair valueof its investments in the two
companies. Itremainsto be seen, how thesehomegrown startups raisefunds challenging theirUS
counterparts.