Global Fashion Group
(GFG) has given a fresh lease of life to fashion e-commerce firm Jabong by deciding to inject $20 million more into its loss-making firm.The funds will help to keep the company afloat for one more year, the report said quoting sources.
“The board has agreed to put more than $20 million in Jabong,” said a source who was part of a recent meeting held in Luxembourg. Rocket Internet and Swedish Investment AB Kinnevik hold 21.9 per cent and 25 per cent stake respectively, in GFG. The group, formed last year after combining five of Rocket’s fashion-focussed e-commerce companies, and currently operates across four continents and 27 countries and employs over 9,500 people.
Oliver Samwer, CEO of Rocket Internet and deputy chairman at GFG, was reportedly not in favour of continuing the India venture, Kinnevik insisted on staying put and the board eventually agreed to back Jabong.There have been reports that Rocket Internet has been in talks leading e-commerce players like Amazon, Paytm and Snapdeal to sell Xerion Retail, the unit that operates Jabong.
Xerion Retail crossed the Rs 1,000 crore sales mark in the year ended March 2015 as its net loss widened to Rs 43.6 crore from Rs 16.6 crore a year earlier.Jabong receives funds on a regular basis, similar to the financing structure of other multinational corporations, adding that there are no pre-agreed funding commitments.
“GFG has raised over $1.5 billion in capital in its history and its Board remains unanimously committed to all regions it operates in, including India. Jabong has made a number of recent senior management hires and has also recently witnessed record operating performance. These facts, which are supported by public filings on our current investment rate, are clearly evident of GFG’s commitment to growing Jabong,” it said in the email.
Jabong competes with Flipkart-owned Myntra
, Snapdeal and Amazon in India’s online fashion retail space. Its five founders have either left or were replaced in a management churn last year. GFG appointed Sanjeev Mohanty as CEO and Managing Director of Jabong, effective early December.
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