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E-commerce giant Alibaba may buy $1.2 bn stake in Indian smartphone maker Micromax

Alibaba Group
Holding is reportedly in talks with India’s phone maker Micromax Informatics to
buy an about 20% stake in the company, reports Reuters, citing sources.

The deal, if
completed, would see Alibaba investing as much as $1.2 billion in Micromax, the
second-largest smartphone brand in India by sales, and would value the company
at up to $6 billion, sources told Reuters.

According to
industry research firm IDC, India is the world’s third largest smartphone
market and was the fastest growing in the Asia Pacific region in the third
quarter of last year.

Sources said in
the report that Micromax and Alibaba reportedly began talks on the stake sale
after discussions with investors led by Japanese telecoms firm Softbank Corp
stalled over differences in valuations. Softbank is the largest shareholder in
Alibaba.

“The
Softbank talks are not officially over, but it’ll be hard to get back on
track,” a source told Reuters.

According to the
report, the Chinese e-commerce giant wants to use the Micromax deal to tap into
the boom in the number of internet users in India, which is also one of the
world’s most rapidly growing smartphone markets.

“The talks
are centered around using Micromax devices as a platform to get into a serious
business of its own in India,” one of the sources was quoted in the report
as saying, referring to Alibaba.

Alibaba, for
example, would be able to roll out services such as Alipay, its online payment
platform, on Micromax phones. Ant Financial Services Group, which owns Alipay,
is China’s largest payment service provider and is controlled by Alibaba’s
executive chairman and founder Jack Ma.

The stake sale
is aimed at helping Micromax raise capital as it expands into new business
segments including personal computing. The company is seeking funds from
private investors, or a possible stock market listing, its co-founder told
Reuters.

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