In a sign of things to come, Chinese e-commerce giant Alibaba has begun the process of setting up a team in India to look at merger and acquisition (M&A) opportunities.
According to a report in The Hindu Business Line, Alibaba has already interviewed 10-12 executives, including a few from top venture capital firms and investment banks, to head its M&A team.
The newspaper also said that Alibaba might be looking at simultaneously merging the Snapdeal and Paytm e-commerce and wallet (FreeCharge and Paytm) businesses. The Chinese company currently holds stake in Indian firms Paytm and Snapdeal.
The news of the Chinese e-commerce behemoth’s possible entry into India has already unsettled retailers – both online as well as offline.
Alibaba is looking at opportunities to build the business organically as well as through other means. It has already approached Tata Sons for a possible partnership. Experts say it will take two quarters for Alibaba to finalise a joint venture partner.
Paytm to help Alibaba establish India presence
Meanwhile, parallel reports are suggesting that Paytm is considering a plan to spin off its online marketplace to allow Alibaba to establish a direct presence in the world’s fastest growing e-commerce market.
“The Indian company may spin off its marketplace business, which will have Alibaba as a majority stakeholder in that company and allow Alibaba to organically expand in India,” an unnamed source was quoted by The Economic Times as saying, adding that the Indian firm’s payments bank, digital wallet and online-to-offline business categories such as bus ticketing and travel would likely be run as a separate business.
New FDI Rules
The new rules on foreign direct investment in online marketplaces could accelerate the entry of Alibaba Group, both as an investor as well as a retailer, and potentially alter India’s e-commerce landscape given their deep pockets.
The latest guidelines are expected to offset a potential two-horse race between Flipkart and Amazon in India, adding pressure on them even as they may have to restructure their operations to comply with the new rules.
Recent news updates suggest that Alibabahas overtaken America’s Walmart to be world’s largest retailer.
With an expected overturn of $490 billion in 2015-16, the Chinese retailing brand is the global leader in the sector.
The dethroning of Walmart comes on the basis of measurement by annual gross merchandise volume (GMV) on its China retail marketplaces, based on official documents submitted on April 5.
GMV is the total value of all products sold through an online platform, and is different from the company’s revenue, which would typically be calculated as a sum of the commission it earns from sales on its platform.
The claim was backed by PricewaterhouseCoopers, which had evaluated Alibaba data relevant to its group GMV.
Alibaba to go public?
Alibaba’s affiliate Ant Financial, could start the process of going public this year, reports said, with the firm’s latest fundraising valuing it at $60 billion.
Ant Financial Services Group, which owns and operates the Paypal-like service Alipay, has met the Chinese listing requirement of three years’ profitability, Bloomberg News cited unidentified sources as saying.
It is planning to list on the Shanghai stock exchange, they said, and could become China’s biggest initial public offering (IPO) since 2010.