Snapdeal to rake in the moolah? Know why!

Chinese ecommerce giant Alibaba, which is also the world’s largest, may soon become etailer Snapdeal’s strategic partner in India. According to an ET report, the companies have revived discussions and group of new investors, which is headed by Alibaba, is expected to invest in the Indian online marketplace.

The report also stated that the group of potential investors has already started the due-diligence process last week.

Apart from Alibaba, Taiwanese Alibaba will be joined by Taiwan's based electronics contract manufacturing company Foxconn Technology Group, too is interested in investing in Snapdeal by partnering with Alibaba. In fact, the company also met several Indian government officials last month.

Earlier this year, Alibaba made its first major investment in India when it signed a $550 million cheque for a strategic stake in online payment company Paytm.

Nevertheless, the report also noted that there is no clarity on the quantum of the funds that Snapdeal is likely to raise. While some have suggested that Snapdeal will raise close to $500 million, with Alibaba expected to invest close $150 billion, others have stated that the company will raise at least $1 billion of primary and secondary capital with new investors on board.

Analysts predict that this round of funding, if implemented, will make the company second most valuable start-up at a valuation of nearly $7 billion. Interestingly, arch-rival Flipkart too plans to raise $550 million at a valuation of $16 billion.

"Raising capital has become a permanent function for Indian ecommerce companies, and strategics are becoming preferred partners given their bigger cheque books," said Nitin Agarwal, managing director of investment bank Equirus Capital in the report.
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