Mahindra Group has announced the acquisition of BabyOye baby care products the online retailer backed by Tiger Global and Accel Partners. The deal which was under consideration since last year and according to sources it has been prepared as an asset sale. It will also mark the creation of the first major venture capital write-off in the country’s rapidly growing ecommerce segment.
Notably, Tiger Global, Accel Partners and Helion Venture Partners had jointly invested $14.5 million in BabyOye since the past four years. Regarding this, a source from one of the venture capital firms that invested in Nest Childcare Services firm which owns BabyOye has claimed that BabyOye is no longer a part of their group. It was also added there is no cash involved in the deal.
However, the details of the transaction have not been disclosed yet and Mahindra Group Chairman and Managing Director, Anand Mahindra stated about the achievement of the acquisition on social networking channels. Eventually, BabyOye is owned by a unit called Mahindra Internet Commerce.
Another source that knows about the deal claims that the transaction has been framed as an asset sale and it was done last month. It is claimed that investors are taking a huge write-off on their investment.
Back in December, Mahindra Partners, the emerging business arm of the firm was in talks to acquire BabyOye with an intention to integrate it with Mom & Me, the existing offline baby care products store. Notably, BabyOye closed its last fiscal year that ended on March 31, 2014 with net losses at 15.14 crore and revenue of Rs 29.8 crore.
Founded by Sanjay Nadkarni and Arunima Singhdeo in 2014, the firm raised funds in 2013 and was acquired byBangalorebased Hoopos. Also, Hushbabies that was supported by Kalaari Capital closed operations as it was not able to make fresh capital.
While the baby care products market is expected to touch $10 billion in the country, the online stores in the segment account for less than 5 percent of this estimated value. Niche retailers including BabyOye and others are getting edged out by the dominant players like Aamzon, SnapDeal and Flipkart. Eventually, only couple of the baby care products players remains now and they are FirstCry and Hopscotch.
