After investing in Snapdeal and Paytm, Alibaba is now reportedly planning to acquire a stake in Flipkart in order to further strengthen its foothold on India’s Internet market.
According to sources familiar with the matter, the talks are still at a very nascent stage and the likelihood of a deal is a function of Flipkart’s willingness to offer a discount on its current valuation of $15 billion.
Apparently, Alibaba is also talking to Snapdeal, and it wants a discount on the firm’s current valuation of $6.5 billion.
The sources also stated that given a situation where there are not many takers for India’s top eCommerce firms at their current valuations, both Flipkart and Snapdeal are prompted to approach Alibaba Group for cash. The companies are under scrutiny from investors owing to their growing losses. Further, the expansion of Amazon in India has also emerged as one of the biggest challenges for these native biggies.
If the Flipkart-Alibaba deal goes through, it will make Alibaba one of the three most important investors in India, along with Tiger Global Management and Japan’s SoftBank Group.