After series of talks and premature fallouts, the word is out again that Alibaba and Snapdeal have restarted negotiations and are going to enter in a mutually beneficial deal.
Snapdeal didn’t need funds. Then?
In April this year, Snapdeal had declared they don’t need funds. Snapdeal’s Co-founder and CEO, Kunal Bahl had said, “We have enough capital. In fact, we have used a fraction of the amount that we have raised. We don’t have to raise money now just because it is fashionable.” Then why this sudden change of heart? Looks like, it probably was too soon to declare.
Raising funds a permanent affair in ecommerce
Biggies of ecommerce like Flipkart, Amazon are raising money and forming strategic partnerships left, right and centre. As Nitin Agarwal, MD of Equirus Captial rightly pointed out, “Raising capital has become a permanent function for Indian ecommerce companies, and strategics are becoming preferred partners, given their bigger cheque books.”
As per this ETRetail news report, Snapdeal is looking to raise a minimum of $500 million, in which Alibaba would pitch in anywhere between $100-150 million. Other contributors will include Taiwan’s Foxconn Technology Group and most likely previous investors Softbank and Temasek.
Alibaba’s interest in Indian ecommerce
Jack Ma, founder of Alibaba had made his interest to invest in Indian ecommerce quite evident. The biggest global ecommerce player is keen on acquiring Indian online companies. In spite of initial failed talks with Snapdeal, Alibaba went ahead and collaborated with Cashkaro and One97 communications who owns Paytm.
With this latest development of reviving talks with Snapdeal, Alibaba will not only get a strong foothold in Indian ecommerce scene, but Snapdeal’s worth will multiply too.