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Alibaba Set To Invest $1.2 Billion In India’s Largest OEM Micromax

May 8, 2015 - Written By Kishalaya Kundu

There have been reports circulating in the Indian media for the last few days about Micromax Mobile, which said that the largest smartphone manufacturer in India was looking for strategic investment in order to shore up their R&D to allow them to better compete against established global giants like Samsung and new entrants to the Indian market like Xiaomi and Asus. New reports indicate that the rumored negotiations with a consortium of investors including China’s Ant Financial Services has reportedly already been finalized and the official announcement is not that far away. It is worth mentioning here, that Ant Financial Services is the holding company for Chinese Tech giant Alibaba’s online payment platform, Alipay. The deal reportedly involves Micromax divesting a 25% stake for around $1 – $1.2 billion. If the deal does go through, it will value the Gurgaon, India based firm at around $4 – $5 billion. The proposed deal will also be the Alibaba Group’s second major investment in India, after buying out mobile payments platform Paytm earlier this year for an estimated $575 million. Alibaba Group founder Jack Ma has been quoted as saying that he is keen to continue investing in India’s mobile and e-commerce segment.

There have also been reports that Micromax was in advanced stages of negotiations with Japan’s Softbank, although that deal fell through because of valuation concerns, according to sources familiar with the goings on. Ironically, Softbank happens to be the single largest shareholder in Alibaba, while current investors in Micromax include TA Associates, Sequoia Capital, Sandstone Capital and Madison India Capital. Sources claim that Alibaba is looking to use Micromax devices “as a platform to get into a serious business of its own in India”. This deal, once formalized, will help Alibaba to roll out its online payment service Alipay on Micromax devices and will infuse the necessary capital for Micromax to pursue its ambitions of foraying into smart wearables and personal computing segments.

Micromax is reportedly India’s largest smartphone manufacturer as of Q1, 2015, according to Counterpoint Research. Canalys had already claimed that Micromax had surpassed Samsung in sales in Q4, 2014, but Samsung challenged that report by citing a report by GfK, which put Samsung firmly at number one for that quarter. All the parties involved in the negotiations including Micromax, Alibaba and Softbank refused to comment on the deal.