According to latest reports coming out of India, Micromax Mobile, India’s largest homegrown smartphone manufacturer, is seeking infusion of capital from a consortium of investors including China’s Ant Financial Services Group. One of the largest companies in China, Alibaba, seems interested. The deal reportedly involves picking up 25% stake in Micromax, for over $1 billion. If this deal does go through, it will make Micromax Mobile valued at nearly $5 billion. Earlier in the day, there were reports in the press as to how, Micromax was seeking strategic investment in order to better compete with growing competition in one of the fastest growing smartphone markets on the planet. Quoting anonymous sources, the company is in advanced stages of negotiations with multiple parties and it will take some time before the deals and terms are finalized and officially announced to the media.
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For the uninitiated, Micromax is either India’s biggest or second biggest smartphone vendor, depending on which market analysis and research firm you want to believe. A few months ago, Canalys came out with a report, saying that Micromax had surpassed Samsung as the largest smartphone OEM in India; a claim that was almost immediately contested by Samsung, who cited a GfK report to counter Canalys. Whichever way you look at it, this current report of Micromax looking for capital shows that they realize how serious the threat is from recent entrants like Xiaomi and Asus.
Micromax had, in 2010, filed for an IPO (Initial Public Offering), but eventually backed out citing “unfavorable market conditions”. This time around, even though the IPO option is still on the table, the promoters apparently want to keep their company private, and hence, looking for the strategic investment route rather than getting their company listed on the bourses. With this latest round of investment rumors, there have been some amount of speculation as to whether the founders are looking to exit the company, but the company has looked to nip those rumors in the bud by categorically denying those reports, and saying that the founders will stay on irrespective. There have been reports previously that Micromax has been looking to raise as much as $1 billion and names of probable investors like Japan’s Softbank has done the rounds. Current investors in Micromax include TA Associates, Sequoia Capital, Sandstone Capital and Madison India Capital. According to the report, a Micromax spokesperson refused to comment, saying that “Micromax does not comment on market speculations and rumors”.