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Monday, 11 May 2015

Micromax Funding By Alibaba


We already knew that budget smartphone maker Micromax is looking to raise funds to stay competitive in the market against the foreign companies like Samsung and Xiaomi. Today a report from Re/code stated, Chinese biggest e-commerce company Alibaba Group is in talks with Micromax to buy a stake of 20% of value $1.2 billion at the valuation of $6 billion.

According to International Data Corporation an industry research firm, “India is the world’s third largest smartphone market and is fast growing market in the Asia Pacific region.”
Micromax is the second largest smartphone maker in the country only next to Samsung. It has 18% of market share in the Indian smartphone market. It investors include TA Associates, Sequoia Capital, Madison India Capital and Sandstone Capital.
SoftBank which holds a major share of 32% in Alibaba Group had differences over the valuation of Micromax. Recently Alibaba acquired 25% stake in One97 Communications, which owns Paytm. Even Alibaba recently announced the quarterly results and mentioned that strong revenue for mobile transactions helped the company reporting a 45% increase in revenues. With this deal, Alibaba can integrate its software like ‘Alipay’ with the Micromax devices. Alipay is the China largest payment service.
The money from the stake sale can used to expand Micromax into new business. Micromax recently acquired a minority stake in healthcare startup ‘HealthifyMe’. It also set up an M&A (Merger and Acquisition) Team, which is evaluating start-ups in India, Asia, Europe and Silicon Valley in the areas of healthcare, gaming and entertainment.

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