After weeks of speculation and several suitors, Freecharge has been acquired by India’s third-largest private lender, Axis Bank, for about $60 million. The digital wallet service was put up for sale about half a year ago by parent Snapdeal, which itself is scouting for a potential buyer. Snapdeal had bought Freecharge in 2015 for an estimated $400 million. Market leader Paytm too was in the running to buy Freecharge, but Axis Bank offered a better deal.
Freecharge will strengthen Axis Bank’s payments operations and also bring in much-valued technological expertise for the lender. The bank will now pay Snapdeal Rs 385 crore in cash and absorb Freecharge’s 200-250 employees. Freecharge has 50 million customers at present — more than Axis Bank’s 40 million. Whether both entities will merge or continue to operate separately is left to be seen. “We expect Freecharge to contribute significantly in our aspiration to serve the digital native and mobile-first young consumers of India,” Shikha Sharma, MD & CEO of Axis Bank, said at a press briefing. ALSO READ: Payments Bank: Here’s what Paytm and others have set out to accomplish
Founded in 2010 by Mumbai-based entrepreneur Kunal Shah, Freecharge began as a recharge and deal coupons service, before becoming a full-fledged mobile wallet. It became particularly popular among young adults and even college-goers for its free coupons. The Axis Bank-Freecharge deal is the first-of-its-kind in India, wherein a traditional bank has acquired a fintech startup. Freecharge claims to have a network of 2 lakh merchants, while Axis Bank has one of widest point-of-sales (PoS) reach in the country. ALSO READ: Snapdeal-owned Freecharge has a new bidder in Amazon: Report
In the last few weeks, global retail giant Amazon had emerged as one of the bidders for Freecharge. The Seattle-based company, which has just started its Amazon Pay wallet in India, would have merged Freecharge and posed a real challenge to market leader Paytm. Even PayPal was in talks to pick up a minority stake in Freecharge back in April. However, Snapeal founders reportedly kept turning down several funding and buyout offers for Freecharge owing to differences with the board. Now, that Axis has put rumors to rest, the deal is awaiting approval from market regulator RBI.