Internet auction giant eBay said on Tuesday (18) it was selling part of its stake in India’s ecommerce start-up Snapdeal, while Taiwan electronics giant Foxconn announced it would invest $200 million (£128m) in the Indian company as part of efforts to tap a huge potential market.
Foxconn’s fully-owned subsidiary in Singapore, Wonderful Stars, will acquire a 4.27 per cent stake in Snapdeal, according to a statement released by Foxconn.
An eBay statement offered no specifics on the divestment, describing the sale as “another step to effectively manage our global interests and invest in other strategic initiatives.”
“Over the past two years, the valuation of Snapdeal has significantly increased, and because eBay was an early investor, this sale will enable us to earn a strong return on our invested capital and strategically redeploy it into other areas of our business,” eBay chief financial officer Scott Schenkel said in the statement.
He added that “India is an important market for eBay, and part of our fast-growing APAC region” and that the California group would seek to grow its India-based ecommerce operations.
“While we will retain a significant portion of our original investment in Snapdeal, we also have a strong, healthy business with eBay.in,” Schenkel said.
“Going forward, we will focus on accelerating eBay’s presence in India, and empowering customers through technology, as with our new #SheMeansBusiness program that encourages female entrepreneurs.”
Last year, Snapdeal secured some $627m (£401m) from Japanese tech giant SoftBank, coming on top of the $350m (£224m) previously raised since its founding in 2010. Snapdeal’s valuation was estimated at $2 billion (£1.28bn) at the time of the SoftBank deal.
US research firm CB Insights lists Snapdeal’s current valuation at $2.5bn (£1.6bn), making it the second-largest venture-funded start-up in the country after Flipkart.
Meanwhile, Foxconn’s investment came after Terry Gou, founder of the Foxconn group, signed a memorandum of understanding with Devendra Fadnavis, chief minister of the western Indian state of Maharashtra, early this month to invest $5bn (£3.2bn) in a new plant.
Foxconn, the supplier to Apple also known as Hon Hai Precision Industry, is the world’s largest computer components manufacturer and also assembles products for Sony and Nokia.
The group has production facilities in more than 10 countries, including Vietnam, Brazil and Mexico.