Alibaba & Foxconn In Talks To Jointly Invest $500 Mn In Snapdeal, Will Value Snapdeal At $5 Bn

According to a recent report published by WSJ, Chinese ecommerce giant Alibaba Group and Foxconn Technology Group are in talks to invest over $500 Mn in Snapdeal.com, if the deal goes through, Snapdeal will be valued at about $5 Bn. 

A person close to the development said that Alibaba and Foxconn have decided to take over 10% stake in Snapdeal through this deal, which is not yet finalised.

Report further states following facts: 

• Foxconn Chairman Terry Gou convinced Alibaba Executive Chairman Jack Ma to invest together rather than separately.
• Last year also Alibaba was in talks with Snapdeal for increasing the stake, but however, Alibaba was not interested in a small stake in the company.

Alibaba is already actively looking to invest in Indian startups, earlier this year, it had invested in Paytm’s parent company One97.

This deal makes sense for Foxconn because this will give the contact electronics maker to have a foothold in the country, which is among the fastest growing countries in terms of smartphone usage. “By investing in Snapdeal, one of India’s major sales platforms for handsets, Foxconn could help its customers, including Xiaomi and Micromax, secure a crucial sales channel in the fast-growing electronics market. The contract manufacturer is also looking to build a logistics operation and a funding platform to support startups in India as part of efforts to diversify beyond hardware assembly,” mentions WSJ.

Adding on, Foxconn has also tied up with Snapdeal founders to look for Indian startups. According to ET, 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. According to the sources, these were the mobile-based startups that offer on-demand services.

Snapdeal had raised about $1 Bn in funding last year alone. Its investors include eBay, Temasek, Myriad, Tybourne, Blackrock, Premji Invest and Ratan Tata.

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