Talks between Alibaba and Snapdeal for investment had been going for the last few months. Finally, the deal has been confirmed according to multiple sources familiar with the development, as per Recode report. The Chinese eCommerce company has invested $500 million in Snapdeal with participation from Taiwanese electronics manufacturer Foxconn alongwith existing Snapdeal investor SoftBank.
With this round, the company’s valuation is said to be $5 billion. In October 2014, Japanese telecom and internet corporation, Softbank had invested $627 million in Snapdeal in order to strengthen its hold in the Indian market. Snapdeal has previously raised over $1 billion from investors including SoftBank, eBay, BlackRock, Bessemer Ventures and Indian venture firms such as Kalaari Capital and Nexus Venture Partners.
The news comes just a few days after Flipkart raised a fresh round of funding of $700 million (Rs 4,500 crore) at a valuation of $15 billion. In February this year, Alibaba Group’s finance arm, Ant Financial bought 25% stake in Paytm, which competes with Snapdeal in the eCommerce space.
Also, this new funding in Snapdeal will help Foxconn to establish its footprint in the country. A lot of interest in India comes from demographics. Now, Amazon has announced another massive $5 billion investment over the next few years after committing $2 billion investment to support its Indian growth in 2014.
It remains to be seen if this will in anyway cause synergies to develop between Snapdeal and its rival Paytm, since that’s also one of Alibaba’s portfolio companies in India.