Bangalore: Moscow based investment firm ru-Net seems to have become the first ever foreign investment company to invest in Indian retail business. The company that mostly deals with internet and technology based investments has invested $17 Million in the ecommerce sites Freecultr and BeStylish, which are run by Smile Group.

Freecultr has received funds worth $9 Million while BeStylish bagged $8 Million investment. “While Freecultr is an apparel designing and retailing company, which was recently in the news for its merchandising tie-up with Bollywood actor Shahrukh Khan’s Kolkata Knight Riders, BeStylish is a shoe e-retailing company. BeStylish sells about 1,000 pairs of shoes daily and Freecultr 190-200 pieces of clothing,” reported Business Standards.

“Yes, it is correct ru-Net has invested in Smile and Freecultr. The reason Smile went to ru-Net for money has mostly to do with the fact that it was unable to raise money from existing private equity players in India,” a Smile Group Official told Business Standards.

“To justify a $25-million valuation, any given company has to have about 1,000 transactions a day, where Freecultr is just doing 200 transactions daily. This is another example of an inflated deal. Besides this, it sees the deal as a long-term partnership with Smile, which has a pretty diverse portfolio,” said an Indian PE investor. The e-commerce segment in India was supposed to touch Rs 47,000 crore last year, growing at 25-30 per cent a year. Most investments in e-commerce till date have come from the UK and Mauritius-based funds like Sequoia Capital and Tiger Global.