Ant Financial Services Group, China’s leading online financial services company owns Alipay has valued India no.2 handset maker Micromax at $5 Billion company. Micromax is in close talks to sell 25% stake to a consortium lead by Alipay. Alipay is China’s leading online payment solution company and is a part of Alibaba Group.
The proposed deal would give way to infusion of capital and allow exists in partial or total by existing investors. An exit will give existing investors earn significant returns on their investments. If the deal to be closed would partly depend on resolving differences which has cropped up between the company’s promoters and chairman Sanjay Kapoor. He is a former CEO of Bharti Airtel’s Indian business and Rahul Sharma, Rajesh Agarwal, Sumeet Kumar and Vikas Jain. All the five own majority stake of less than 80% of the company.
However Micromax investment committee comprising of its promoters, top management and existing investors will take a call by the end of June 2015. Once the deal is successful, allows new entrants will get entry into the company’s board. Micromax is fairly cash rich with revenue of over Rs.11,000 crores at end of financial year 2015.
Micromax is controlled by the promoters who hold 80% and 15% held by TA Associates and Sequoia Capital. Sandstone Capital owns 2.68% and Madison India Capital has 0.4% stake in the company. Spreadtrum Communications, a Chinese semi conductor provider has invested $10 million for a minority stake.
Already Micromax has toppled Samsung in India with its smartphone range. Another Chinese smartphone make Xiaomi is closely following Micromax with its innovative strategies in sales and marketing may not allow Micromax to stay in top position for longer duration. Micromax knows this fact very well and need to move in faster pace into services and actively considering Alipay’s stake offer.
For Alipay its win-win situation, that gives a stronghold in a relatively new territory and business segment. The company can integrate its services, where it gets access to number of customers at one shot. Recently Alipay invested $575 million in PayTM, a mobile payment and commerce platform. If the deal is through PayTM app can be integrated into all Micromax handsets.