According to The Economic Times, citing sources familiar with the discussions, the two companies have recently held meetings with merchant bankers to discuss potential acquisition and investment opportunities, in a bid to secure a slice of the market together, rather than as rivals.
The discussions are still in an early stage, however, various scenarios have been taken into account. In one scenario, Alibaba can participate in follow-on funding rounds for companies in SoftBank’s portfolio in India. In October 2014, SoftBank invested USD 627 million in Snapdeal and USD 210 million in Uber rival Olacabs. The Japanese company has also picked up a stake in online real-estate venture Housing.com. Alibaba could also take over a majority of the ventures of the Masayoshi Son-led group, which is expected to invest up to USD 10 billion in India.
One source, who participated in the meeting, told The Economic Times that Alibaba is currently testing the waters through SoftBank to get a feel of the market. Alibaba has been focused on investments and acquisitions. The company spent more than USD 4 billion in 2014 to invest in companies ranging from taxi-booking to film production.
According to Reuters, India has the third-largest internet user base in the world, which is somewhat underserved by online marketplaces. Estimated growth by 2019 should exceed USD 43 billion, indicating that the Indian ecommerce market is poised to see even fiercer competition.
Flipkart has recently closed its third round of funding for the year, raising USD 1.9 billion in a single calendar year to step up investments and boost its presence, especially in smaller cities and villages. Amazon.com has also announced to invest USD 2 billion in India as competition intensifies.
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