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.
Though Alibaba has indirectly entered the Indian e-commerce segment through investments in Snapdeal and Paytm, it could be looking for a more direct play in accessing the growing online consumer base here.
According to industry sources, Alibaba has already interviewed 10-12 executives, including a few from top venture capital firms and investment banks, to head its M&A team.
“Going by its recent investment trends, it is not surprising that Alibaba is setting up a team to evaluate inorganic growth. They need a physical presence both to be near to the market and spot opportunities early,” said Sanjay Mehta, a serial angel and PE investor.
Alibaba did not respond to queries e-mailed by BusinessLine .
Currently, it has indirect investments in e-marketplaces Snapdeal and Paytm. Sources aware of the development said Alibaba may take the M&A route in India instead of starting from scratch. “It might begin with a minority investment in some company followed by a complete acquisition,” said an expert.
Another source said Alibaba might be looking at simultaneously merging the Snapdeal and Paytm e-commerce and wallet (FreeCharge and Paytm) businesses.
In expansion mode Alibaba’s focus is to expand its foreign business as growth in urban China is maturing and revenue growth might plateau in the near future. According to Alibaba’s December quarter results, the company is looking at getting about 50 per cent of its overall revenues outside China.
The recent acquisition of Singapore-based Lazada for $1 billion is part of its strategy to enter new markets. Alibaba is looking at acquiring Shanghai-based Ele.me for $900 million. It also took a majority stake in US-based ride sharing company Lyft for $400 million recently.