India’s Snapdeal to raise $500 million from Alibaba, SoftBank, Foxconn

Investors included Chinese e-commerce giant Alibaba, along with Foxconn, the Taiwanese iPhone manufacturer and existing Snapdeal investor SoftBank.

Snapdeal had previously raised more than $1 billion from a clutch of investors, including SoftBank, eBay, BlackRock, Bessemer Ventures and Indian venture capital firms such as Kalaari Capital and Nexus Venture Partners.

In a related development, Snapdeal has also announced the launch of its new instant delivery service, called Snapdeal Instant, which is a hyperlocal delivery service now in pilot phase in 3 Indian cities -Delhi, Bangalore and Mumbai.

In June, when rumours of the arrangement were first swirling, the Wall Street Journal reported that a deal of this magnitude would bring the value of the five-year-old company to around US$5 billion. The person was not authorized to disclose the matter and so declined to be identified.

The deal additionally displays robust progress in India’s e-commerce sector, pushed by reasonably priced smartphones and web connections.

In fact, the two rivals have each entered the logistic business by opening up their platforms (Snapdeal’s SafeShip and Flipkart’s eKart) to other vendors, and Snapdeal plans to spend 0 million to 0 million expanding its delivery operations over the next year. Alibaba was in direct funding talks with Snapdeal in March, but opted to instead invest together with SoftBank and Foxconn, the person familiar with the $500 million investment said.

Snapdeal, Japan’s SoftBank, Alibaba and Foxconn declined remark. Snap Deal is a competitor to Flip Kart as well as Amazon and Morgan Stanley estimates that the company would be worth $102 billion by 2020.

The deal can be Alibaba’s first direct funding in India, though affiliate Ant Financial Services Group [ANTFIN.UL] in February agreed to purchase 25 % of Indian cost providers agency One97 Communications.

Snapdeal has raised another $500 million in funding, according to a report from ReCode on Sunday.

Recently, Foxconn founder Terry Gou had said India is a key market this year for his group.