By acquiring Jabong, the online fashion retailer has consolidated its position as the market leader. Now, it has set its sights firmly on profitability, says CEO Ananth Narayanan
It was a typical quarterly board meeting for the Myntra team on a cloudy Thursday morning on July 21. The top management of the country's largest online fashion retailer was taking stock of the company's growth and financials at their sprawling headquarters off Hosur Road in Bengaluru. The financials were in line with expectations and the conversation soon drifted to competitors. That brought the conference room to a potentially game-changing deal brewing in the market: Jabong, the second largest online fashion retailer in India, was up for sale; also, importantly, Snapdeal’s exclusivity for the all-cash deal had expired.
The timing was perfect and the excitement in the room was palpable.Jabong was of immense interest to Myntra. In fact, in the last year, the Bengaluru-based firm had engaged thrice with the Rocket Internet- backed Jabong for an acquisition, the last conversation being as recent as in April. The upside is self- evident: The acquisition creates a formidable joint entity, nullifying competition and accelerating growth. Happily, the sell price had come down since early last year and worked well for Myntra, which had itself been acquired by Flipkart two years ago for $375 million.
This time around, Myntra wasn’t taking any chances. It sought the help of its US-based investor Tiger Global Management, one of the world’s largest hedge funds and venture capital investors. As a result, on the evening of July 21, Lee Fixel, partner at Tiger Global, called Lorenzo Grabau, chairman of Global Fashion Group (GFG), the entity into which Jabong was absorbed in 2014 (see timeline on pages 52-53). Fixel learnt that if Myntra could muster up $70 million, the deal could be closed. (Tiger Global refused to comment on the deal when contacted by Forbes India.)
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