Micromax, India’s biggest maker of mobile devices, is to divest a 25% stake to a consortium of investors led by Alibaba Group’s online financial services firm, Ant Financial, which owns the payment platform, Alipay. The deal is to value the Gurgaon-based Micromax at an estimated $4 -$5 billion, the Economic Times newspaper said on Monday. In response to Forbes’ emailed query, Micromax refused to confirm the story. But for months, rumors have swirled around the company’s intent to make a public offering or sell substantial stake to an investor.
If Alipay does snap up a slice of Micromax, India’s phone wars could heat up to witness a China vs. China battle with leading Chinese phone maker Xiaomi already aggressively positioning itself in the market. Xiaomi has just announced that it has brought aboard Ratan Tata, chairman emeritus of Indian conglomerate Tata Group, as an investor. In less than a year since its entry into the country, Xiaomi has entered the league of top 5 in India among smartphone makers.
Micromax rose to become the top-selling mobile maker by putting low-priced, features-filled smartphones into the hands of middle-class Indians in India, one of the world’s fastest growing mobile handset markets. Five years after its launch, it has overtaken global brands Nokia and Apple and outran market leader Samsung earlier this year.
The phone maker is known to be one up on its rivals by constantly adding innovative features such as dual SIM slots, QWERTY keypads, budget-priced quadcore smartphones and local language integration. Outside India, Micromax sells in Russia and the South Asian neighborhood but intends to launch in a further 10 countries soon.
If the deal with Micromax goes through, it will be Alibaba Group’s second buy in India following a $575 million in mobile payments platform Paytm earlier this year. After multiple trips to India, Alibaba Group founder Jack Ma has been quoted as saying he is keen to continue investing in India’s mobile and e-commerce segment.
Micromax based in the Gurgaon suburbs of India’s capital, New Delhi, is said to have 22% share of phone shipments as of end 2014 with a range to suit every pocket in price-sensitive India. Low-priced devices that cost $100 or less form the bulk of its sales.