The Chinese conglomerate has already backed the payments processor Paytm and e-tailer Snapdeal in the local market, livemint.com reports. The talks are at a very initial stage and the likelihood of a deal is a function of Flipkart’s willingness to offer a discount on its current valuation of USD 15 billion, the source informs by citing people aware of the matter.
Flipkart’s valuation has soared five times to USD 15 billion since May 2014 when it raised USD 210 million from DST Global, Tiger Global Management and others. Snapdeal’s valuation has increased more than 6 times since it raised USD 100 million the same month. Since then, Flipkart has raised USD 2.4 billion while Snapdeal has raised more than USD 1.3 billion.
Provided 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. The proposed deal may also lead to progress towards consolidation of India’s large ecommerce businesses. SoftBank, Alibaba’s largest investor, is also Snapdeal’s biggest backer.
As of 31 December 2015, Alibaba had cash and cash equivalents of USD 17 billion, according to the company’s quarterly earnings report. Chinese firms are increasingly taking interest in Indian businesses as valuations stabilise. In January 2016, Chinese travel booking company Ctrip picked up a stake in MakeMyTrip by investing USD 180 million.
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