FIH Mobile Ltd (富智康), a subsidiary of Taiwanese contract manufacturer Hon Hai Precision Industry Co (鴻海精密), on Tuesday said it would invest US$200 million in leading Indian online marketplace Snapdeal, as part of efforts to tap a huge potential market.
FIH Mobile’s fully owned subsidiary in Singapore, Wonderful Stars, will acquire a 4.27 percent stake in Jasper Infotech Pvt Ltd, the owner and operator of Snapdeal, FIH Mobile said in a statement.
Through the investment deal, FIH Mobile expects to transform itself by providing services such as “end-to-end” information and mobile networks, while Hon Hai is expected to improve its infrastructure and consumer service, according to the statement.
The investment came after Hon Hai Group (鴻海集團) founder Terry Gou (郭台銘) signed a memorandum of understanding with Devendra Fadnavis, chief minister of the western Indian state of Maharashtra, early this month to invest US$5 billion in a new plant.
Founded in 2010, Snapdeal is one of India’s biggest e-commerce companies and has become a competitor of US online retailer Amazon.com Inc, with mobile devices accounting for the largest share of Snapdeal’s overall sales.
Snapdeal said in a statement on Tuesday that Alibaba Group Holding Ltd (阿里巴巴) and Hon Hai Group pushed further into India by leading an investment of US$500 million in Snapdeal, while existing investors Softbank Corp, Temasek Holdings Pte Ltd and BlackRock Inc also participated in the round.
US research firm CB Insights lists Snapdeal’s current valuation at US$2.5 billion, making it the largest venture-funded start-up in the country after Flipkart.
The online marketplace companies have drawn investors from around the world seeking to repeat the success of Alibaba. In the previous 18 months, more than US$5 billion has been invested in Indian e-commerce, resulting in companies hiring Bollywood stars as ambassadors and luring customers with huge discounts.
“India is among the last truly large markets that’s still untapped, so everyone wants to get a stake,” Technopak Advisors Pvt retail vice president Pragya Singh told Bloomberg News on Tuesday.
“The competition will go up, everyone will push hard to get more sellers, and there will be lots of discounts and offers to woo customers,” Singh said.
Meanwhile, eBay Inc on Tuesday said that it was selling part of its stake in Snapdeal, but said the Asian nation remains an “important market” for the US online giant.
An eBay statement offered no specifics on the divestment, describing the sale as “another step to effectively manage our global interests and invest in other strategic initiatives.”
“Over the past two years, the valuation of Snapdeal has significantly increased, and because eBay was an early investor, this sale will enable us to earn a strong return on our invested capital and strategically redeploy it into other areas of our business,” eBay chief financial officer Scott Schenkel said in the statement.
“Going forward, we will focus on accelerating eBay’s presence in India, and empowering customers through technology, as with our new #SheMeansBusiness program that encourages female entrepreneurs,” Schenkel said.
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