Global e-commerce firm eBay Inc. has written down its investment in online marketplace Snapdeal but recorded gains by selling its India unit to Flipkart, the company said in its annual report.
ebay said it recorded a $61 million impairment charge to write down its investment in Jasper Infotech Pvt. Ltd, which runs Snapdeal, in 2017. eBay had invested Snapdeal in 2014 and made a partial exit in 2016 at a profit.
“The investment was measured at fair value due to events and circumstances that we identified as having (a) significant impact on its fair value,” eBay said.
Snapdeal’s fortunes have taken a turn for the worse over the past two years as competition in India’s e-commerce sector intensified after global online retailer Amazon.com Inc. started expanding rapidly.
Snapdeal’s valuation had fallen to less than $1 billion last year from a peak above $6.5 billion just a couple of years ago. Also last year, Snapdeal and bigger rival Flipkart sought to merge with each other but subsequently called off the deal.
Separately, ebay sold its India unit to Flipkart last year while simultaneously investing $500 million in the online retailer. The two e-tailers also agreed to jointly pursue cross-border trade opportunities to make eBay’s global inventory accessible to more India consumers, the annual report said.
eBay also said it had recorded a gain of $167 million by investing in Flipkart. The merger of eBay's India business and investment in Flipkart has given eBay a 5.44% stake in Flipkart, the annual report noted. It added that eBay’s total investment in Flipkart will now be considered as $725 million.
eBay’s investment in Flipkart was part of a larger round where Microsoft Corp and China’s Tencent also invested. Later in the year, Flipkart had raised another $2.4 billion from Japan’s SoftBank Group Corp, another major investor in Snapdeal.