Updated: Online babycare products retailers Hoopos and Babyoye Merge, Raises $12 mn

babyoye.gifUpdate: Our report on the possible merger between Babyoye and Hoopos has been confirmed. Hoopos has merged into Babyoye and the new entity has raised $12 mn in fresh capital in a round led by Helion Advisors, which had invested in Hoopos earlier. Tiger global and Accel Partners have also invested along with Helion in this round.

Consolidation is picking up in the Indian e-commerce space. Bangalore based Hoopos, which retails baby care products online has merged with Babyoye, a company operating in the same category. At least three sources told NextBigWhat that a deal is likely to be announced in few days.

There are no common investors forcing the deal, unlike other recent e-commerce mergers. However, this merger will place the new entity on a stronger footing against rival company Firstcry which has managed to capture a large chunk of the market.

“The deal is being discussed and finalised by existing investors (i.e; Accel Partners, Tiger Global and Helion Advisors), and it is likely to be announced in few days,” said one of the sources.

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Babyoye had raised $2.5 mn from Accel Partners and Tiger Global in 2011. Hoopos had raised early stage risk capital from Helion Advisors.

This is the first consolidation of online retailers in the babycare space. The e-commerce industry has been witnessing some consolidations initiated by common investors over the past year or so. In 2012, Delhi based electronics etailer Letsbuy was acquired by Flipkart. Recently, Myntra acquired Exclusively.in and SAIF Partners funded Zovi bought Inkfruit. Besides these two, Gurgaon based marketplace Tradus acquired Buytheprice.

The merger of two companies also make sense as IDG backed Firstcry has grown fast and grabbed the leadership position in the segment. And if Babyoye and Hoopos come together they would be in better position to compete with Firstcry. Presently, both ventures are almost running out of capital and investors are unlikely to pump further money, but merger of two may attract some bridge financing from the existing investors (just the way, PlaygroundOnline & Sportsnest merged and raised capital from Blume).

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