Internet giant Info Edge has suffered a total loss of ₹532.25 crore from writing off its investment in Rahul Yadav’s proptech start-up 4B Networks in Q2 FY23. Info Edge had invested in the company via its partly-owned subsidiary Allcheckdeals India.
The loss comprised ₹719 crore of goodwill, ₹80.77 crore for net assets and ₹12.32 crore for inter-corporate deposits (ICDs) given and reduced by non-controlling interest payable of ₹280.27 crore, according to the filing.
While, the firm’s cash infusion in the start-up stood at ₹288 crore, the rest is the notional loss from a higher valuation than the start-up commanded earlier. The start-up had a valuation of ₹719 crore, mentioned as goodwill in the MCA filing before Info Edge had to write down its entire investment made through its wholly-owned subsidiary ALLcheckdeals India.
The firm noted that the excessive cash burn, prevailing liquidity issues and significant uncertainty towards funding options as the reasons for the write-off. “The company continues to explore various options in the best interest of stakeholders and will re-evaluate such position, if and when underlying assumptions related to survival and sustainability of investee company,” as mentioned Info Edge’s in its financial statement.
In May 2022, Info Edge acquired a majority stake in 4B Networks by investing ₹137 crore in the Mumbai-based start-up and increasing its stake to 57.16 per cent on a fully diluted basis. It has invested over ₹280 crore and holds over 65 per cent stake in the company.
Started in November 2020 by Housing.com founder Rahul Yadav, 4B Networks was created to enable real-estate developers and brokers to communicate with each other and conduct their business through its platform. It also helped in loan origination for end consumers. At its peak in September 2022, Broker Network (operated by 4B Networks Private Limited) was valued at $185 million.
In October, Info Edge also filed a complaint with the Economic Offences Wing (EOW) of Mumbai Police against Rahul Yadav for alleged cheating to the tune of ₹288 crore. The charges are being investigated by Mumbai Police as well as other law enforcement authorities.