Alibaba is set to buy a 20-26% stake of India's Micromax, the most popular and emerging handset manufacturer of the country.
Latest Alibaba news is regarding the stake that it is going to buy in Micromax which is an Indian phone maker. It is considered that there will be one fourth of stake that the Chinese e-commerce giant is planning to buy and might close the deal soon. The one fourth parts is approximately 20-26% of the stake that will be sold to the e-commerce giant.
This deal will provide the ability to the most prominent e-commerce company in the world to enter the fastest and promisingly growing handset markets in the world. As the announcement is going to make its way soon, the transaction is most likely to be around $3.5 billion which equals 21,000 crore in Indian Rupees. The legal documentation is in the process right now and might be finalized in fortnight. This deal might value the Indian’s handset manufacturing giant at the high of $5 billion. There might be a participation of SoftBank from Japan which has a major chunk of stake in Alibaba (32%).
Alibaba news reports that the largest e-commerce firm from China and the Internet and telecom giant from Japan, Softbank are being advised by Citigroup whereas Micromax is seeking advice by Goldman Sachs. One of the sources stated, "SoftBank and Alibaba will invest jointly in Micromax in what's known as a comingled fund." The companies have not yet addressed any speculation by the media.
ET was the first in February to point out at the possible deal that could be made between the two giants. At that time, it was suggested that if any deal happens, it shall see the exits and capital infusion by the current investors. This shall result in the current investors getting returns on their investments.
The TA Associates has the stake in Micromax for about 15 percent. That stake had been bought 5 years ago for 225 Crore (Indian Rupees) when the handset manufacturer had the value of 1,500 crore (Indian Rupees), profiting the investors in return by providing them greater returns.
For quite some time, not only the Chinese e-commerce giant had been making its powerful presence felt globally but in U.S and in India in particular. Earlier this year, Ant Financial had acquired 25% stake in the company that owns Paytm, a mobile payments platform, namely One97 Communications Ltd. This stake deal shall help Micromax raise the capital as the expansion into new areas comes into being, these areas shall include personal computing as well.
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