SoftBank Records $351-Million Loss On Snapdeal, Ola Investments

Japan’s SoftBank Group, among the largest investors in Indian startups, has reported a valuation loss of 39.3 billion yen ($351 million) in two of its biggest bets in the country, cab-hailing firm Ola and e-commerce marketplace Snapdeal, the company said on Wednesday.

The valuation loss in nine months ended December 31, 2016 compares with a gain of 108.4 billion yen ($965.1 million) in the year-ago period, according to the company’s earnings report.

SoftBank had led a $627-million investment in Jasper Infotech-owned Snapdeal and a $210-million round in ANI Technologies-operated Ola in 2014. The Japanese group also participated in follow-on funding rounds. While Snapdeal has raised $1.76 billion since inception, Ola has mopped up more than $1.2 billion so far, according to data cited by Crunchbase, which aggregates information on startups.

Vanguard World Fund recently marked down the value of its shares in Ola by 41 percent, bringing the cab-aggregator’s valuation down from $4.3 billion to $2.5 billion. Snapdeal was reportedly valued at $6.5 billion when it last raised $200 million in February 2016.

Forex Gain Cushions Loss

The SoftBank earnings report said, “Gain or loss arising from financial instruments at FVTPL (fair value through profit or loss) comprises mainly of changes in fair value of preferred stock investment including embedded derivatives, such as ANI Technologies Pvt. Ltd (Ola) and Jasper Infotech Private Ltd. (Snapdeal) in India, designated as financial assets at FVTPL.”

The loss would have been higher at around 55.4 billion yen, but for a gain of 16.13 billion yen due to fluctuation in foreign exchange rates. The Japanese fund house had reported a loss of 58.1 billion yen ($555 million) from its financial instruments for the six months through September 2016.

SoftBank did not give a breakup of the fair value of ANI Technologies and Jasper Infotech for the nine months through December 2016. A company spokesperson did not respond to an email seeking a clarification and comment.

The loss in the value of its investments comes at a time when both Ola and Snapdeal are reportedly looking to raise fresh funds. Mint had reported in January, citing unnamed sources, that Snapdeal was in talks with the SoftBank Group to raise fresh funds at a lower valuation. Bloomberg had reported in November last year that Ola is in talks to raise about $600 million.

SoftBank has committed to invest $10 billion in India over 10 years, its Managing Director Masayoshi Son had said during its India visit in December, adding that there is “new technology and new excitement” in the country.

Overall, SoftBank reported a 71 percent jump in the operating profit at 295 billion yen for the October-December period from 172 billion yen the year before.