Stock Market

Snapdeal-Housing.com deal goes for a toss, says sources

The mega Snapdeal-Housing.com deal seems to have hit a roadblock. A valuation mismatch has halted the deal, sources say.


Housing.com’s co-founder Rahul Yadav made news for all the wrong reasons. From public verbal spats with investors to altercations with the media, then the online real-estate firm had to go in for a restructuring of its business after which it was forced to slash jobs across the board.


These are just a few of the reasons that in the last 12 months, Housing.com’s valuations have fallen by as much as 50 percent.


Housing.com’s management, of course, refuses to buy into the lower valuations and it is this mismatch in valuations that seem to have stalled the on-going negotiations between Snapdeal and the Housing.com management.


Analysts have pegged Housing.com’s valuations at around USD 300 million but CNBC-TV18 learns that that Snapdeal is keen on picking up the online real-estate firm at a 20-30 percent discount to this number.


Part of Snapdeal insisting on such a steep discount is that it believes there is a cloud over Housing’s business — both ongoing and future prospects.


The company has not managed to raise capital after Softbank pumped in USD 90 million in November 2014. It has taken a big hit from the slump in the Indian real estate sector, and have even been forced to shut down its rental business to focus only on buying and selling of apartments.


Its employee strength has dropped to 400 from 1,600 and it has shut 4 out of 5 offices in Mumbai and Bangalore.


CNBC-TV18 learns that Softbank and Nexus Venture Partners, which have invested in both Sapdeal and Housing.com, are driving discussions at this stage.


Nexus Venture Partners admits that pressure from investors to focus on the bottomline may have led to Housing.com’s current situation, but is quick to point out that that’s just one reason among many.


Aren Gupta, Co-Founder of Nexus Venture Partners says that investors are to blame for this, as it is certainly their fault and part of it is the market dynamics.


He added that investors do not monitor ventures on a daily basis and at the end, it is the entrepreneurs that run the company.


The other reason for failures among startups according to Nexus, is internal fights among co-founders, which certainly has been in the case of Housing.com as none of its founders are on board any longer and this gives credibility to the argument that the company’s future is uncertain.


When contacted by CNBC-TV18, Housing.com did not want to comment on this story, and Snapdeal has denied it is having any discussions with Housing.com