It is disclosed that China’s Alibaba Group, Japan’s SoftBank Group Corp & Foxconn are going to invest $500 million in India’s Snapdeal, the online marketplace, country’s fast growing ecommerce sector.
This is also the second biggest round elevated by Snapdeal that had earlier raised $627 million from Japanese giant Softbank. Snapdeal, which lists itself as India’s version of Alibaba, did not flare up individual investments. An early backer of the company, EBay Inc, is selling part of its stake in a transaction which will also call for fresh funding.
Snapdeal stated that existing investors Temasek, BlackRock, Myriad & Premji Invest also participated in the funding round. In a statement, EBay stated that it has sold a portion of its stake and would focus on boosting its own business in the country.
In another occasion, FIH Mobile, a unit of Taiwan’s Foxconn, the trading name of Hon Hai Precision Industry Co, told it was buying a 4.27 % stake in Snapdeal for $200 million via its Singapore-based subsidiary Wonderful Stars Pte. As per the sources, Reuters this month that the transaction would value Snapdeal at more than $5 billion.
Snapdeal rivals, in India, Flipkart, estimated at around $15 billion, & Amazon.com Inc’s India unit as the three fight it out for a share of a $22 billion market. Like its rivals, Snapdeal gets the majority of its transactions on smartphones & mobile devices.
In a statement, Foxconn reported, “That is why, with a significant share of e-commerce transactions in India being done via mobile devices, the investment positions FIH to benefit from Snapdeal’s platform.”
From India’s fastest growing online sector, boosted by a rise in use of affordable smartphones & internet connections, Alibaba & eBay also expect to get profit.
Alibaba has pointed out that India is a key market for the group. After China & the United States, India proves to be the world’s third-biggest smartphone market.
According to a Morgan Stanley report, India has fewer internet users than China, online sales could climb to more than $100 billion in 2020 from $2.9 billion in 2013, making it the fastest-growing market globally.