Chinese online retail behemoth Alibaba is betting big on India. Earlier this year, the company invested about $500 million for 25% stake in mobile commerce firm Paytm. In June, Alibaba poured in another $600 million to hike its stake in Paytm to 40%. The Hangzhou-based company, along with Foxconn and SoftBank, has also invested $500 million in Snapdeal.
Alibaba shifts focus from early stage to established players
After having tested waters with Paytm and Snapdeal, Alibaba is now looking to invest in “more mature” companies in Indian e-commerce space. Sources familiar with the matter told the Economic Times that the Chinese company has appointed three bankers to scout for investments bigger than $100 million. The company has appointed Goldman Sachs, Citigroup, and Bank of America-Merrill Lynch for the task.
This hedge fund is so optimistic about COVID-19 that they’re short Clorox [In-Depth]
A lot has happened since the coronavirus pandemic began, but aside from the temporary selloff in March, the stock market has continued to hum along as if nothing has been happening. There's no denying that the financial markets have been changed by the pandemic, and investors should be thinking differently when it comes to investing Read More
Sources said the Jack Ma-led company was shifting its focus from early-stage startups to well-established e-commerce players. Last year, Alibaba founder Jack Ma said India would be a priority international market for the company. Sources told the Economic Times that the Chinese giant was looking to replicate its China model in India.
Alibaba in no hurry
Alibaba is in no hurry as the Indian e-commerce market is yet to mature. It is currently screening multiple firms based on a variety of metrics, not just the gross merchandise volume (GMV). In fact, top Alibaba executives are frequently flying to India for meeting with e-commerce firms.
Indian e-commerce market, though nascent, has become fiercely competitive. Market leader Flipkart has raised more than $2 billion in the last year to maintain its dominant position. Last month, Amazon announced that it would invest $5 billion to expand its presence in India. Snapdeal is diversifying its offerings to attract more users. It would be interesting to see how Alibaba’s investment and technical expertise would benefit the Indian startups.
Alibaba shares fell 1.72% to $73.89 in pre-market trading Tuesday. The stock was dragged by a 6.35% decline in the wider Chinese stock market.