Alibaba reported to pick up 25% stake in Micromax at Rs 30,000 crore valuation, chairman Sanjay Kapoor may exit

Chinese online giant, Alibaba, is reportedly looking at picking up a 25 percent stake in Micromax. The investment is likely to happen via its affiliate Ant Financial (erstwhile Alipay). Micromax was reportedly in talks with Alibaba and Japan’s Softbank. The report comes a day after Xiaomi announced Ratan Tata had invested an undisclosed sum in the Chinese smartphone company, which has turned into a major rival for Micromax, selling over a million smartphone units in less than five months of its entry in India.


The move would help Micromax’s existing investors – TA Associates, Sequoia Capital, Sandstone Partners and Madison India Capital HC – to unlock their investment in the company and could sell their entire stake. TA Associates had acquired a 15 percent stake in 2009 for Rs 100 crore, while Sequoia Capital, Sandstone Partners and Madison India Capital HC own 2.68 percent and around 0.4 percent stake respectively.

The reported investment by Alibaba could see Micromax valued between Rs 24,000 – Rs 30,000 crore. If this deal is successful, there will be a major rejig in the top management, and Economic Times reports that it may even lead to Chairman Sanjay Kapoor’s exit. Citing anonymous sources, the report states that the fundraising plan may be completed by June end.

The report also states that there are some internal differences between Kapoor and the promoters over the future business strategy. Reportedly Kapoor feels that online sales is the way forward, the promoters want to stick with traditional offline retail as it still brings 70 percent of revenue to the company. Rahul Sharma, Rajesh Agarwal, Sumeet Kumar and Vikas Jain are the four founders and they collectively own a little less than 80 percent of the company.
One of the sources told the publication that once the deal is done, for which the final call will be taken by the investment committee of Micromax, Kapoor may exit and new board members will be added. The investment committee comprises of promoters, top management and existing investors.
We contacted Micromax and the spokesperson of the company said:

As a company policy, we do not comment on any market speculation. Mr Sanjay Kapoor continues to be our chairman & an integral part of the company. Micromax board and management work under clear principles of consensus, and they are working cohesively (on all strategic & operational issues) with complete unanimity to build Micromax’s leadership in all our markets.

Tags: Alibaba, Alipay, Micromax, Micromax Fund Raising, Sanjay Kapoor