Also in this letter:
■ Glance set to raise $200 million from Jio Platforms
■ Delhi HC dismisses Zostel’s attempt to halt Oyo IPO
■ K’taka HC strikes down major portions of online gaming law
Mamaearth seeks BBlunt makeover, Cult.fit joins Gold’s Gym
Mamaearth cofounder and CEO Varun Alagh
Mamaearth, a direct-to-consumer (D2C) startup, has acquired Mumbai-based BBlunt from Godrej Consumer Products Limited (GCPL) for about Rs 134 crore.
Under the terms of the deal, BBlunt’s hair care and styling products business will be completely owned and managed by Mamaearth parent Honasa Consumer.
The two-decade-old salon business will continue to operate as an independent entity.
In a separate filing with the BSE on Monday, GCPL said it would receive a total of Rs 84.5 crore from the sale, including Rs 25.7 crore for its stake in the company and Rs 58.8 crore for brand rights. “The transaction is subject to certain condition precedent and is expected to be completed on or before March 14, 2022,” the filing said.
Meanwhile, fitness centre chain Cult.fit has picked up a majority stake in F2 Fun & Fitness, thereby becoming the master franchise partner for Gold’s Gym in India.
Cult.fit said it will invest in increasing revenues from existing Gold’s Gym centres, and facilitating centre expansion via franchisees in coming years. Gold’s Gym is the second-largest fitness chain in India, operating more than 140 gyms across more than 90 cities.
Significance: Both deals involve traditional businesses – salons and gyms – that have been badly hit by the pandemic even as startup valuations have gone through the roof.
- Gurugram-based Mamaearth’s parent became a unicorn on January 1 after raising $52 million in a round led by existing investor Sequoia Capital.
- Cut.fit’s parent firm Cult.fit Healthcare was valued at $1.5 billion after a recent investment by Zomato.
These are also not the first traditional businesses to be acquired by startups since the start of the pandemic.
- In April 2021, Byju’s acquired tutorial chain Aakash Educational Services for $950 million, sealing its largest buyout. It was also one of the largest acquisitions ever by an Indian startup, bigger than Snapdeal’s purchase of Freecharge for $400 million in 2015 and Flipkart’s acquisition of Myntra for an estimated $330 million in 2014.
Glance set to raise $200 million from Jio Platforms
Lock-screen platform Glance, which is part of the InMobi Group, on Monday said that it will raise $200 million from Reliance’s Jio Platforms Ltd.
Deal details: The transaction is subject to the satisfaction of customary closing conditions and regulatory approvals. The investment will value Glance at $1.7 billion to $1.8 billion post-money, according to a Reuters report.
The proposed investment by Jio is aimed at accelerating Glance’s launch in several key international markets outside of Asia including the US, Brazil, Mexico and Russia. With the investment, the entity is now looking to further bolster its live content capabilities and enable its commerce ecosystem further.
Glance has also entered into a business partnership arrangement with Reliance Retail Ventures, providing for Glance’s ‘lock screen platform’ to be integrated into the JioPhone Next smartphones.
Slice, Bizongo complete Esop buybacks: Fintech firm Slice and supply chain enablement platform Bizongo announced the completion of their first employee stock ownership plan (Esop) buyback programmes.
Buyback details: Slice said around 60 current and former employees were eligible for its buyback programme, worth Rs 65 crore (around $8.6 million).
- Close to 54 existing and current employees participated in the buyback exercise.
Bizongo said that 102 of its current and former employees with vested options were eligible for its buyback.
- A little over 70 individuals participated in it.
- The total value of the buyback stood at Rs 27.9 crore.
Delhi High Court dismisses Zostel’s attempt to halt Oyo IPO
Oyo dodged a bullet on Monday when the Delhi High Court dismissed an interim appeal filed by Zostel (Zo Rooms) that had sought to halt its IPO.
Zostel had said Oyo’s IPO was ‘non-maintainable’ as the company’s capital structure was not ‘final.’
Catch up quick: The dispute between the two companies dates back to 2015, when they signed a contract for Oyo to acquire Zostel.
- The deal fell through, but Zostel said that it still deserved about 7% in Oyo’s parent firm Oravel Stays.
- A Supreme Court-appointed arbitrator said in March 2021 that the term sheet between Oyo and Zo was binding and that Oyo, after a point, stopped taking steps to fulfil obligations under it. It said Zo was “entitled” to make “appropriate proceedings”.
- Since the dispute landed in court, Oyo has maintained the said term sheet was non-binding and challenged the arbitrator’s order.
- On October 11, we reported Zostel had asked Sebi to reject Oyo’s draft IPO papers and suspend its IPO.
Appeal incoming: Sources told us Zostel was likely to challenge the latest Delhi High Court order.
What they said: Zostel’s legal counsel Abhishek Malhotra said, “While it does not have an impact on the final award (7% stake in Oyo) that we have received, the immediate relief that we sought – a stay of the IPO – has been denied at this stage. We are evaluating our options including filing an appeal before the division bench.”
A spokesperson for Oyo said, “While we await the full order, we believe that Zostel’s demand for issuance of 7% shares of Oyo under the arbitration award has also been rejected. This verdict vindicates our stand that Zostel has been trying to mislead the public.”
A shrunken IPO: ET reported on February 10 that Oyo was likely to reduce the size of its IPO in view of adverse secondary market conditions and a crash in stock prices of new-age tech startups.
In its draft IPO papers filed with the markets regulator in October 2021, Oyo had sought to raise $1.2 billion. But now the IPO size is expected to be much lower than $1 billion, sources told us.
K’taka HC strikes down major portions of state’s online gaming law
The Karnataka high court on Monday struck down the contentious amendments to the Karnataka Police Act, 1963, which bans online ‘games of chance’, while allowing the petitions filed by the All India Gaming Federation (AIGF) and gaming companies.
What did the court say? A division bench said the amendments violated the Constitution. But it said it was not striking down the entire law, only some offending provisions.
The court left it open for the legislature to consider passing a new law against gambling, one that conformed with the Constitution.
It also restrained the state from interfering with the online gaming business and related activities of gaming firms such as Dream Sports and Mobile Premier League. The petitioners had contended that Karnataka’s law effectively curbed online games of skill, too, which had been allowed by the apex court.
Last October, the Bengaluru City police had booked Dream11 co-founders Harsh Jain and Bhavit Sheth under the provisions of the new law.
China apps ban: Gaming, beauty and dating apps dominate latest list
Chinese apps banned by the Union government in its fifth and latest crackdown include a host of games including Garena Free Fire; Isoland 2: Ashes of Time Lite; Rise of Kingdoms: Lost Crusade; Conquer Online and Twilight Pioneers.
New avatars: Many of these apps belong to large Chinese tech firms such as Tencent, Alibaba and gaming firm NetEase, and are “rebranded or rechristened avatars” of apps that have been banned in India since 2020.
ET reported on Monday that the ministry of electronics and IT had ordered a ban on 54 more China-origin apps in India, terming them a “threat to national security”.
Other casualties: The latest round of bans also included messaging and dating apps such as CuteU: Match With The World, CuteU Pro and FunChat Meet People Around You. Also on the list were video-based social media platforms such as SmallWorld, FancyU, MoonChat and RealU.
Round 5: This is the fifth round of major bans of Chinese apps by the Indian government following border tensions with China in 2020. In June that year, the government blocked 59 apps including hugely popular ones such as TikTok, Shareit, UC Browser and WeChat. Since June 2020, the government has banned around 224 Chinese apps in total.
Today’s ETtech Top 5 newsletter was curated by Arun Padmanabhan in New Delhi and Zaheer Merchant in Mumbai. Graphics and illustrations by Rahul Awasthi.
