Snapdeal has gotten quite a bit of attention lately. And it might get a whole lot more with the news that Chinese eCommerce giant Alibaba may look to help invest $500 million in the Indian online marketplace.
A Wall Street Journal report indicates that Alibaba and Foxconn Technology Group are in talks to invest that $500 million in the marketplace, which would boost the value of the eCommerce startup to $5 billion. eBay is a major investor of Snapdeal and in early 2014 led a $134 million (20 percent stake) investment in Snapdeal. SoftBank is also a major investor.
One unnamed source told WSJ that Alibaba and Foxconn have taken a combined 10 percent stake in Snapdeal, but the source indicated that the deal hasn’t been finalized since it needs to go through India’s regulatory process. That same source stated that the leaders of the two companies decided it was in their best interest to invest together, as opposed to as separate entities.
As an eBay-type of online marketplace for India, Snapdeal competes with Flipkart to gain the increasing amount of online shoppers turning to eCommerce across the region, but in the past year Snapdeal has accelerated its growth. For example, in April, the online commerce company announced its acquisition of mobile transactions platform FreeCharge. The deal, which Snapdeal touted as “one of the biggest acquisitions in the history of the Internet industry in India,” positioned the mobile commerce company as the largest in that country.
Reports earlier in the year indicated that a potential acquisition of Snapdeal by Alibaba may have ended due to a disagreement about valuation, but neither company confirmed the terms of that reported deal. Other reports suggest that Alibaba wanted a larger stake in the company than Snapdeal was willing to give up.
Snapdeal, however, isn’t Alibaba’s only interest in Indian companies. Alibaba and its financial services affiliate agreed in January to jointly invest $575 million in India’s One97 Communications Ltd.’s online payment and marketplace businesses. That gave Alibaba a 25 percent stake in the company.
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