Chinese e-commerce giant Alibaba is close to making yet another major investment in the Indian market. Sources familiar with the matter told The Economic Times that Alibaba affiliate Ant Financial, which owns Alipay, is in advanced talks to acquire 25% stake in the Indian smartphone maker Micromax. The deal could be announced as early as June.

Alibaba Group Holding Ltd In Talks To Buy 25% Stake In Micromax

Alibaba could help Micromax get into services

The deal would value Micromax at $5 billion. Ant Financial will also bring in two or three new partners. The proposed deal would see both the infusion of new capital and exit of some investors. Four co-founders of Micromax own about 80% stake in the smartphone company, while TA Associates owns another 15%.

According to The Economic Times, Micromax was planning to go public. But the company has shelved its IPO plans in favor of bringing some strategic investors. One of the sources said that to topple Samsung and compete againt Xiaomi, Micromax needs to move aggressively into services. And a giant like Alibaba could help it get there.

Will it be Alibaba vs. Xiaomi?

Earlier this year, Alibaba purchased 25% stake in the Indian mobile-commerce firm Paytm for $575 million. There are rumors that if Alibaba-Micromax deal goes through, the Chinese company may integrate Alipay or Paytm in all of Micromax handsets. The Hangzhou-based company has for years been struggling to increase the footprint of its YunOS. The deal may allow Alibaba to put its mobile OS on some of Micromax devices.

In February, Alibaba acquired a minority stake in Chinese smartphone maker Meizu to put YunOS on some of Meizu’s handsets. YunOS still has only about 10 million users in China, where Android accounts for more than 80% market share. Competition in the Indian smartphone market continues to intensify as Xiaomi is vying for the top spot. Recently, billionaire Ratan Tata, the former chairman of Tata Group, made a personal investment in Xiaomi, which is setting up an R&D center and a manufacturing unit in India.