New Delhi: The online retailer giant Snapdeal is in talks with Alibaba seeking a record funding round of Rs. 6200 crore ($ 1 billion).
The Delhi-based marketplace seeks a combination of money and a marquee name in its threeway fight for dominance of India's online retail sector.
Jasper Infotech, the company which owns Snapdeal, is aiming for a valuation of at least $5 billion (Rs 30,000 crore) in this latest round, sources said.
According to a report in Economic Times, Jasper raised Rs 3,800 crore ($627 million) from Japan's SoftBank, valuing the company at Rs 11,200 crore ($1.8 billion).
Sources say Snapdeal has a term sheet from Alibaba, but is not getting the valuation (it) wants.
On the other hand, private equity firms are making higher offers, so it can likely be a joint investment. A team of Snapdeal's top executives, including Wharton Business School alumnus and co-founder Kunal Bahl, was in China last week for negotiations with Alibaba.
The investment by SoftBank allowed Snapdeal to compete on even terms against market leader Flipkart and US-based Amazon in a market that is estimated by Nomura to be worth $23 billion (Rs 1.5 lakh crore) by 2018.
All online retailers are offering deep discounts to lure buyers, in the process burning large amounts of cash. Alibaba, the world's largest ecommerce company with a market cap of $210 billion, has been looking to increase its footprint in India, considered one of the most lucrative markets for consumer Internet globally.
In 2014, Alibaba held talks with Snapdeal for a possible investment ahead of the visit of its chairman Jack Ma to New Delhi in November and was ready to invest in Indian market.
For Snapdeal, raising money is vital now for several reasons — it is using up cash at a fast rate and it is making acquisitions to bolster its technology and top line.
Besides, rivals have deep pockets: Flipkart raised $1.9 billion last year and is planning to raise $1.7 billion this year while Amazon's Jeff Bezos has committed $2 billion to the Indian operations.
A report in ET says, Snapdeal could record a five-fold increase in losses going up to $250 million (Rs 1,500 crore) this fiscal. Co-founded by Bahl and Rohit Bansal, Snapdeal is on course to sell goods worth $3 billion by the end of the current financial year in March, according to industry estimates.