Technology

Alibaba Group Holding Ltd Leads $500 Million Funding In Snapdeal

Chinese e-commerce giant Alibaba had been negotiating to invest in the rapidly-growing online retailer Snapdeal for months. And now Re/code has learned from multiple sources that Alibaba, Foxconn, and Japan’s SoftBank have invested $500 million in the Indian e-commerce firm. The deal values Snapdeal at $5 billion. SoftBank had also invested in Snapdeal in a previous funding round.

Alibaba Group Holding Ltd Leads $500 Million Funding In Snapdeal

Snapdeal’s valuation jumps almost three-fold

We reported in March that a consortium of investors led by Alibaba were in talks to invest up to $1 billion in the New Delhi-based company. But that deal fell apart over valuations. Alibaba was valuing Snapdeal between $4 billion and $5 billion, while the Indian company was seeking a valuation of $5 billion to $6 billion. It seems that the two sides have resolved the issues and agreed at a valuation of $5 billion.

Snapdeal is backed by SoftBank, eBay, BlackRock, Kalaari Capital, Nexus Venture Partners, and billionaire Indian businessman Ratan Tata. Prior to the latest funding round led by Alibaba, Snapdeal had raised a little over $1 billion. In October 2014, it was valued at $1.87 billion when SoftBank poured $627 million in the company.

Alibaba now owns stake in two New Delhi-based e-commerce firms

It is Alibaba’s second major investment in the Indian e-commerce space. Earlier this year, the Hangzhou-based company picked 25% stake in Paytm for $500 million via its financial services arm Ant Financial. Alibaba agreed in June to hike its stake in Paytm to 40% by investing another $600 million. That funding round valued Paytm at $4 billion.

Snapdeal posted gross merchandise volume of $2 billion in 2014. It has set the target of $10 billion in GMV for the year 2015. Its biggest rivals are Flipkart, currently valued at $15 billion, and Amazon. Flipkart has raised billions of dollars in the past year to maintain its leading position in the Indian e-commerce space. Last month, Amazon announced to invest $5 billion in India to make it the company’s biggest market outside the U.S. Alibaba’s backing will also help Snapdeal in terms of technology and expertise.

Alibaba shares were down 0.28% to $78.15 in pre-market trading Monday.