SoftBank writes down $550m in its biggest India investments, Ola and Snapdeal

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Japanese investor SoftBank has cut the value of two of its largest startup investments in India – Ola and Snapdeal. SoftBank has written off a total of around US$550 million in the value of its shares in these companies.

As a result of this markdown, the valuation of the companies in the domestic market will slide down as well.

Although the markdowns are a result of the appreciation of Japanese currency against other currencies, the panic button has been pressed as far as Ola and Snapdeal are concerned. The markdown comes at a time when both Ola and Snapdeal are facing pressure from their rivals – Uber and Flipkart respectively. An email query sent by Tech in Asia to Ola and SoftBank went unanswered. Snapdeal declined to respond, saying, “We cannot comment on accounting practices of any of our investors.”

While both the companies raised significant funds between April and September 2015, this year both Ola and Snapdeal have not rustled up more capital due to a tough funding winter.

SoftBank has invested close to US$2 billion in India till now, and the majority of its funds, about US$1.3 billion, has been deployed in Ola and Snapdeal. SoftBank also has investments in hotel booking platform Oyo, grocery delivery app Grofers, and real estate classifieds player Housing.

SoftBank led a US$210million investment in Ola and US$627 million in Snapdeal in October 2014. It has also made follow-on investments in both firms.

SoftBank reported a loss of US$557 million in its consolidated earnings for the six months period ended September. The loss was mainly due to its investments in India. Of this, US$284 million loss was attributed to the year-on-year appreciation of the yen. Last year, the investor had reported a profit of US$1.08 billion.

The Japanese yen gained 10.2 percent against the US dollar till April this year.

Ola was valued at about US$5 billion after its previous funding round in November 2015, while Snapdeal’s valuation was pegged at US$6.5 billion in February this year.

Flipkart, which is India’s most valued internet company, has seen a series of markdowns from a valuation of US$15 billion to around US$9-10 billion.

• This article was updated to include details from SoftBank.