Axis Bank has confirmed that it plans to acquire mobile payments company FreeCharge from Snapdeal. The deal is worth Rs.385 core and is completely in cash. Axis Bank’s finance chief claimed that digital payments are on the rise while cash usage is expected to decline due to government policies. The deal is pending regulatory clearances.
FreeCharge has 200 employees which will be a part of Axis Bank now. The product itself may or may not remain an independent entity. Initially, it may function as a separate subsidiary of Axis Bank.
The rumor mills have been working overtime over this deal. It was expected that Flipkart was very close to buying out FreeCharge but couldn’t match Axis Bank’s offer.
Axis Bank will gain a lot out of this deal. A mobile payments product is all it needs to surge ahead of its competitors. Traditional banks have struggled to resonate with the younger generation and FreeCharge could help shape mobile payments for Axis Bank.
FreeCharge was previously sold to Snapdeal for around $400 million. The company’s founder Kunal Behl claimed, in a post on social media, that things didn’t quite work out as expected with Snapdeal. When Snapdeal bought FreeCharge back in 2015, it was marked as one of the largest deals in the Indian startup scene.
Even Paytm has supposed to be in talks with FreeCharge over a buyout offer. Paytm currently holds a major chunk of the mobile payments space in India. Buying out FreeCharge would have made it the only large player in the market, apart from Mobikwik and other smaller payment outlets.
FreeCharge’s valuation dropped rather significantly. A lot of it has to do with how quickly Paytm was able to grab the mobile payments market, especially after demonetization.