Alibaba Group Holding Ltd., China's largest e-commerce company, is in talks with iPhone assembler Foxconn Technology Group to jointly invest $500 million in Snapdeal.com for a 10 percent stake, said a report in the Wall Street Journal citing people close to the deal.
Such an investment would value Snapdeal, owned by Jasper Infotech, at around $5 billion and give it a shot in the arm as it competes with bigger rivals Flipkart and Amazon in an intensely competitive Indian market. Last year, Softbank had led an investment round of nearly $1 billion in the Gurgaon-based company. eBay and BlackRock are the other major investors in Snapdeal.
The report said that Foxconn Chairman Terry Gou convinced Alibaba chairman Jack Ma that it would make more sense to invest together than taking separate stakes. Snapdeal's founders had been in talks with Ma earlier this year, but the talks stalled because Alibaba was not interested in a small stake.
Snapdeal and Alibaba declined to comment on the development.
Snapdeal's money raising spree is matched only by its pace of acquisitions. It acquired online mobile recharge firm Freecharge in April to boost its mobile transactions business. On Monday, it bought Letsgomo Labs, a mobility solutions company.
Alibaba wants to be part of India's e-commerce market, which has become the next big frontier after China as more Indians go online to shop for everything from apparel to electronics and groceries. Alibaba had earlier taken a 25 percent stake in PayTM, an online payment business, through its affiliate Ant Financial. E-commerce sales in India could reach upto $60 billion by 2020 from $4.47 billion last year, said a April report by UBS.
Foxconn has been reportedly exploring plans to set an iPhone manufacturing unit in India by 2020, and might set up 10-12 plants in all. It has also said that it is looking for investment opportunities in India. The investment in Snapdeal would give it a retail presence in India, where smartphones sales are booming, the WSJ report said. Smartphone shipments in India are up 21 percent this year — to 20 million units — and more shoppers are using such devices to shop online.
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