Alibaba plans to buy share in its Indian rival company Flipkart. The Biggest Indian online retailer, Flipkart has currently a valuation of $15 billion. The deal would only happen if it offer a discount on the price, sources said. There were rumours that the Chinese online giant was in talks with another retailer Snapdeal. Alibaba plans to increase its reach and popularity in one of the World’s largest market through acquisitions. The Chinese firm has already backed Paytm.
The talks, still at very early stages might only come fruitful if senior officials in both organisations agree to a price way below its current valuation of $15 billion, an Indian newspaper reported quoting inside sources. Alibaba is reportedly talking to another online retailer Snapdeal, where it demands a discount on the company’s current valuation of $6.5 billion. The newspaper reported that neither companies, Flipkart or Snapdeal responded to their quires regarding the Alibaba’s acquisition plans.
Analysts opines that both Snapdeal and Flipkart, the leading Indian e-commerce companies, were forced to approach Alibaba group for investment as there were very few takers for them at their current valuations in India. These companies might go on with the current burn rates for another year and half, but need to fill up the rapidly emptying purses before the year ends. There is a wide spread apprehension among the investors in backing mature online companies in India, which is prompting Snapdeal and Flipkart to reach out to foreign investments.
Flipkart raised $210 million from investors like Tiger Global Management and DTS Global among others in 2014. Since then the company has seen its valuation accented to almost five times to $15 billion. Flipkart has, after this, raised almost $2.4 billion till date. During the same time Snapdeal’s valuation has accented around 6 times and the company raised $1oo million in investments.