Looks like it’s raining money again in the Indian ecommerce space! Or at least for the older players.
Alibaba, after a few investments in Indian companies, has now invested $500 Mn in the ecommerce biggie, Snapdeal. According to a new story published by re/code, Foxconn, the Taiwanese company alongside Snapdeal’s existing investor, SoftBank, also participated in this round.
Talks between Alibaba & Snapdeal for investment had been going on over the past few months. It was earlier reported that in this round Alibaba & Foxconn will be buying 10% stake in Snapdeal and will value the company at about $5 Bn.
This news comes in just four days after reports of Flipkart’s new $700 Mn round had surfaced.
It should be noted that in February this year, Alibaba’s affiliate Ant Financial had picked up a 25 per cent in Paytm, which competes with Snapdeal in the ecommerce space. On the other hand, this deal will make sense for Foxconn because this will help the contract electronics maker to establish a foothold in the country. Interestingly, Foxconn has also tied up with Snapdeal founders to look for Indian startups. Previously, over a dozen Indian startups met Wen-Hsin (Vincent) Tong, chairman and director of investments at FIH Mobile Limited, an investment arm of Foxconn, at Snapdeal’s office in New Delhi.
The Race For Funds
The news of Amazon setting up a war-chest of $5 Bn to expand its network of warehouses, data centres and beef up its online marketplace in India has created pressure on the ecommerce companies operating in the country; forcing them to come up with new strategies and work towards increasing their market share aggressively.