More merger and acquisition in e-retail as funds dry up

Source: Financial Express, Nov 07, 2016

New Delhi: Consolidation in the online retail space is increasing with as many as 11 merger and acquisition (M&A) deals reported in the year so far, reports Anushree Bhattacharya in New Delhi. Data from Tracxn Technologies shows this was more than twice the number of M&A deals transacted in 2015.

Ashish Fafadia, CFO and principal, Blume Ventures pointed out the lack of differentiation in business models and and limited resources have resulted in more consolidation in the e-retailing space. “In the early days several me-too companies were able to raise money but that seems to be over now,” Fafadia said. Blume Ventures is among the shareholders of Ola and was earlier invested in TaxiForSure.

Among the top deals of 2016 are Myntra’s acquisition of Jabong for $70 million, FirstCry’ s buyout of Mahindra Retail’s babyOye for $54 million and Titan’s acquisition of CaratLane for $53 million. Voonik snapped up Zohraa, Picksilk and Getsy.

Supam Maheshwari, CEO, FirstCry said the company was planning 300 stores across the country. “The integration will allow us to shore up our margins as well as the private label business,” Maheshwari exlplained.

Before the merger, FirstCry operated 180 stores while BabyOye ran 120 stores. Post the integration with Mahindra Retail’s BabyOye, the merged entity will conduct its business under the brand name FirstCry.com- A FirstCry Mahindra Venture.

The current year has seen a much smaller quantum of funds being mopped up by e-retailers; just $515.3 million has been raised by a clutch of10 companies, a steep fall over the $2.32 billion raised by 14 e-commerce firms in 2015. Cautious investors have pruned the size of deals; the average investment ticket size at the Series A and Series B levels dropped 47% and 59% respectively. The average investment ticket size at the seed level , however, witnessed an almost 10% increase at $1.2 million. Flipkart which has so far raised $3.19 billion is the most funded company, followed by Snapdeal ($1.76 billion) and Paytm ($950 million), Traxn Technologies noted.

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