Alipay to Buy 25% Stake in Micromax at $5B Valuation

Image Source: wp8mobi

Image Source: wp8mobi

Micromax is set to sell a 25% stake to a consortium led by Ant Financial Services Group which is China’s leading online financial services company(founded by the Alibaba Group) that owns Alipay, making itself valued at $4-5 billion, confirmed five people familiar with the matter.

Alibaba Group’s online payment solution company Alipay, is bringing in a couple of partners, said one of the five people mentioned above. “More partners will give divergence of views and comfort to the lead investor,” the person said. The proposed deal would see both infusion of capital and exits, partial or total, by existing investors.

Although the deal is almost finalized, its accomplishment still depends on resolving the differences that are said to have cropped up between the company’s promoters and its chairman Sanjay Kapoor, a former CEO of Bharti Airtel’s Indian business, over the company’s future direction. The four founder promoters – Rahul Sharma, Rajesh Agarwal, Sumeet Kumar and Vikas Jain own a little less than 80% of the company.

A person associated with Micromax said, “new guard”, mainly Kapoor, feels that Micromax needs to focus on online sales. However, the promoters’ view differ in this case as 70% of its revenue still comes from offline, or traditional retail channels.

As per an anonymous source, there are disagreements over the positioning of the phones and technology adoption. Kapoor believes Micromax should increase its average selling price while promoters feel there is still immense potential in the mass market. Nevertheless, despite the internal rough patch, the deal with Ant Financial Services is on track, reports the ET.

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Both Alipay and Micromax declined to comment on the matter. However, the latter issued a statement through an email confirming that Kapoor continues to be it’s Chairman.

Last month, there were speculations of Softbank buying 20% stake in Micromax for about $1billion. However, eventually it was reported to have dropped out of the race over differences in valuation.

 

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