India: PremjiInvest writes to Snapdeal again for sale clarity

Personal investment arm of Azim Premji wants to know how rights of minority shareholders will be protected in the event of the sale being finalised PremjiInvest, the personal investment arm of Wipro chairman Azim Premji that owns a minor stake in online marketplace Snapdeal, is once again seeking better clarity on the terms at which the troubled company is being sold to market leader Flipkart, according to three people aware of the development.

This is the second query, in as a lot of months, from the investment firm asking how the rights of minority shareholders will be protected in the event of the sale being finalised, the sources said, signalling further delay in the process, which is being steered by Japanese telecom and internet major SoftBank.

PremjiInvest is as well building consensus part other investors, who as well hold small stakes in Snapdeal, inclunding Singapore's sovereign wealth fund Temasek and investment manager BlackRock, to potentially oppose speci al payouts to certain shareholders, said one person cited above.

Such payouts are expected to be made to early investors like Nexus Venture Partners and Kalaari Capital, besides company founders Kunal Bahl and Rohit Bansal, he added. In May , Vani Kola, the managing director of Kalaari Capital, resigned from the board of Snapdeal. Nexus Venture's Suvir Sujan, Bahl and Bansal still hold seats on the board of the company. "The small shareholders in Snapdeal are large guys," said one person privy to the negotiations. The person reckons that over a dozen shareholders, who together own 15% stake in Snapdeal, are planning to join forces.

In the letter sent to the Jasper Infotech board, PremjiInvest has outlined its concerns over the transaction, which aims to close the sale of Snapdeal to its Bengaluru-headquartered rival for $700 million-$1billion.

The transaction is currently in the due-diligence phase. While SoftBank was before expecting the transaction to close by June, it is likely to get delayed at least by an extra month.

All together, the appropriate payments are expected to be about $150 million, and is likely to be borne by the rest of the shareholders, but can only be paid if all of them acknowledge to it. That call will be taken once Flipkart makes its final offer for Snapdeal the sources said.

The likely delay could add to SoftBank's woes, which is the major investor in Snapdeal with a 33% stake next having invested about $1 billion in the company, and has been pushing for a quick closure of the transaction that has been in the works since early this year.

SoftBank is as well in talks to invest in Flipkart as part of the proposed Snapdeal merger, for which it has negotiated for months with board representatives of Nexus and Kalaari, besides the founders.

Apart from PremjiInvest, Snapdeal counts investors such as Ratan Tata, Foxconn, Alibaba Group, Ontario Teachers' Pension Plan, eBay and Hong Kong-based hedge funds, part others, who together own about 40% of the company, but do not have board representation. PremjiInvest and Ontario Teachers' Pension Plan declined to comment, while Snapdeal, SoftBank, BlackRock and Tybourne Capital did not reply to email queries from us on the development.

We Were unable to ascertain if this second letter from PremjiInvest to the Snapdeal board represents the company's other minority stakeholders as well.