After being seesawed across the market for months, Freecharge finally has a new home to look forward to. The Mumbai-based private bank, Axis Bank has agreed to acquire the mobile payment platform for $60 Million. The corporation will be obtaining hundred percent equity capital in an all-cash deal of Rs 385 crore.
Freecharge was only recently purchased by the e-commerce giant – Snapdeal in 2015 for a whopping $400 Million. However, due to a lackluster performance in the last year and the platform’s sudden downfall against rivals like Paytm led to such a loss, people familiar with the matter said. Sources report Axis Bank, managed to outrun a few other bidders including Amazon Inc. and Times Internet Ltd. While the former offered a larger sum, Freecharge decided to settle with Axis Bank instead.
The attainment comes at a time when the Indian government is aggressively pushing the digital payment agenda. With a better set of features and deals, newcomers haven’t granted enough leeway for traditional banks to succeed. Therefore, Freecharge, who still serves roughly 5 crore customers, should prove to a good fit for Axis Bank to make a headway in the industry. “The acquisition was a strategic fit. The platform is a good quality one, and we felt the value we paid was good.“, Shikha Sharma, CEO, Axis Bank, commented further.
Jairam Sridharan, chief financial officer at Axis Bank said, “acquiring FreeCharge will allow us to ‘top up’ our services, the acquisition will help the bank double its customer base.” However, Axis Bank has one impediment to worry about before moving forward. Currently, Reserve Bank of India (RBI) guidelines state that one entity cannot hold more than one pre-paid instrument license. Hence, as per that, Freecharge needs to be dissolved into Axis Bank’s existing operations. Although Sharma mentions that the company will be contacting the authorities “to understand whether FreeCharge can remain an independent entity.”