Strengthening its position against the rising threat from the global biggies such as Amazon and China's Alibaba, the Bengaluru-headquartered ecommerce major Flipkart is likely to snap up US-headquartered eBay's India operations.
The move is part of the company's overall plans to raise $2 billion from a series of investors, including fund infusion from eBay in return for its operations getting acquired by the Indian etailer giant, a Factor Daily report said.
eBay launched its India operations in 2004, but failed to cash in on the early mover advantage before the Indian ecommerce sector became fiercely competitive with Flipkart and Amazon's entry. Over the years, the US ecommerce company languished behind the bigger rivals and stood a distant sixth in the pecking order behind Flipkart, Amazon, Snapdeal, Shopclues and Paytm, says the report.
To boost its operations in the growing online market in India, eBay made several attempts earlier to acquire New Delhi-based online marketplace company Snapdeal, but didn't succeed.
Finally, in order to stay relevant and compete with its US rival Amazon here, eBay's India arm decided to align with Flipkart.
Earlier in March, eBay had appointed Vidmay Naini as the new country manager in place of the incumbent Latif Nathani, who moved back to US after helming the position for more than a decade.
For Flipkart, the latest fund raising will see Chinese internet company Tencent infusing over $500 million, with eBay and Microsoft being other backers.
A Bloomberg report earlier this week said Flipkart has raised $1 billion from Microsoft, Tencent and eBay.
The fresh round of fund raising will value Flipkart around $10 billion, much lower than its peak valuation of $15.1 billion in 2015.
The company has so far raised more than $3 billion in funding, mostly from international investors. The fresh fund infusion likely to come at a time when the company is already facing stiff competition from the US ecommerce giant Amazon and China's Alibaba.
With no shortage of cash to spend, both the overseas e-tail giants have been making fast inroads into the country's multi-billion dollar online retail industry estimated to be around $15-$16 billion, and also threatening to dislodge Flipkart's number one position.
In the recent past, Flipkart's valuation was consistently marked down by its overseas investors due to high cash burn even as profitability remained elusive. In the current month, a mutual fund managed by Morgan Stanley had marked down the value of its holding in Flipkart for the fifth straight quarter, valuing the e-commerce major at $5.37 billion.
Last year, Morgan Stanley had marked down the value of its shares in Flipkart for the September quarter to $52.13 per share from $84.29 per share in March. Throughout last year, the Bengaluru-based firm has seen several markdowns by its investors like Valic Co, Vanguard, Fidelity and T Rowe Price.
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Updated Date: Mar 24, 2017 13:02:31 IST