Chinese E Commerce giant Alibaba is reportedly planning to acquire online marketplace ShopClues.com. The move is considered to be an attempt to overtake the established OLS players in the country such as Amazon and Flipkart. According to the TOIreport, Alibaba wants to merge the marketplace of Paytm, in which it has a stake, with the much bigger rival ShopClues.
According to the report, the Gurgaon-based ShopClues numbers GIC of Singapore, Tiger Global, Nexus Venture Partners and Helion among its investors and has raised about $250 million till date. ShopClues is positioned as an online market, selling cheaper and generally unbranded merchandise to value shoppers. The organization, which is one among the top takeover targets in Indian e-commerce, is said to be reporting a revenue run-rate of $750 million based on the gross merchandise value of the products sold.
It is to be noted that investment bankers have taken multiple deal propositions to Alibaba in recent months. The Jack Ma-led Chinese goliath is hoping to sew up combination moves to challenge Amazon, which has already emerged as the nation’s second-largest online marketplace and is seen threatening Flipkart’s leadership. This includes getting a significant stake in Flipkart and merging smaller Indian opponents with it, or scaling up investments in Snapdeal in which it is currently a little shareholder.
The media reports have speculated about Alibaba’s interest in Flipkart, however, these parleys have stalled over differences in valuations. Incidentally, Flipkart has likewise been rumored as a potential suitor for ShopClues since Tiger Global is a large regular investor in both.
Also Read: Amazon, Flipkart, Snapdeal Under Fire For Flouting FDI Norms
Former Zynga and Yahoo executive K Guru Gowrappan, who has been mandated to graph Alibaba’s development in Asian markets (excluding China), is driving the M&A chats with the senior management of ShopClues, sources, said. Gowrappan, who joined Alibaba in November a year ago, is spending more time in India to finalize Alibaba’s entry strategy. Sources said he was in regards to join the leading body of One 97 Communications, the parent of Paytm, and is working from the latter’s offices in Noida.
Sources cautioned that the discussions with ShopClues may not lead to an exchange. Alibaba could value ShopClues at around $1 billion however the organization’s management is negotiating for a higher valuation. The up and coming Diwali festival season sales would determine the valuations of several Indian e-commerce companies which are in the M&A ring currently.
Meanwhile, Alibaba bunch, which holds around 40 percent stake in Paytm, has reportedly started the process to separate the Noida-based organization’s core payment business and the smaller commerce business into two separate entities. Alibaba is keen on moving the battling and money swallowing marketplace of Paytm into one of the larger blends it is seeking after in the nation.