Snapdeal faces fierce competition from Flipkart, valued at $15 billion, and Amazon, whose founder Jeff Bezos has committed $2 billion in investment for India with more to come.
Snapdeal on Tuesday picked up $500 million in a new round of funding led by China’s Alibaba, Japan’s SoftBank and Taiwan’s Foxconn even as e-commerce company eBay made a partial exit from the online marketplace. With the fresh infusion — in which existing investors Temasek, BlackRock, Myriad and Premji Invest also participated — Snapdeal is now worth an estimated $5 billion.
Reuters reported on Tuesday, citing a company statement, that eBay had sold a portion of its stake in Snapdeal and “will focus on boosting its own business in the country”. The news agency also reported that separately, FIH Mobile, a unit of Foxconn, had said it was acquiring a 4.27% stake in Snapdeal for $200 million via its Singapore-based subsidiary Wonderful Stars.
The Snapdeal stake sold by eBay was purchased by the Foxconn unit and other investors, Reuters wrote, quoting persons familiar with the deal. “Foxconn has made both primary and secondary investments into Snapdeal,” a Snapdeal spokesperson said.
The $500 million will help Snapdeal to take its battle with home-grown e-tailer Flipkart and multinational giant Amazon to the next level. Snapdeal faces fierce competition from Flipkart, valued at $15 billion, and Amazon, whose founder Jeff Bezos has committed $2 billion in investment for India with more to come. Snapdeal has now mopped up $1.8 billion from investors — it had earlier raised more than $1 billion from SoftBank, eBay, BlackRock, Bessemer Ventures, Kalaari Capital and Nexus Venture Partners — while Flipkart has raised more than $2.5 billion.
The investment in Snapdeal allows Alibaba Group to get a stronger foothold in Indian e-commerce. Its financial arm Ant Financial bought a 25% stake in Paytm, an online recharge and bill payment firm that recently turned into a marketplace and now competes directly with Snapdeal and Flipkart. Snapdeal’s site has 150,000 sellers, hosting over 12 million products across 500 categories and servicing 5,000 towns.