• To foster effective partnerships with Chinese businessmen, foreign entrepreneurs learned the best way to seal the deal is through personal connections.

To foster effective partnerships with Chinese businessmen, foreign entrepreneurs learned the best way to seal the deal is through personal connections. (Photo : Getty Images)

China's e-commerce giant Alibaba has been negotiating for a deal to acquire online marketplace ShopClues, which is valued at more than $1 billion, in a bid to enter India's e-commerce market, the Times of India reported.

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People privy to the matter said that Alibaba is trying to bolster its presence against rival Amazon by merging the marketplace of Paytm, with rival ShopClues.

ShopClues, a company based in Gurgaon, has raised about $250 million in recent fundraising with investors that include GIC of Singapore, Tiger Global, Nexus Venture Partners and Helion, among others.

Popularly known as an online flea market, the Indian company sells cheaper and mostly unbranded products. Based on the gross merchandise value of the goods sold, the company earns revenue of about $750 million.

In recent months, Alibaba has received multiple deal proposals from investment bankers. The Chinese company is trying to consolidate moves to challenge Amazon as it is also interested in getting a substantial share in Flipkart and merge small Indian firms with it or raise its investments in Snapdeal as a shareholder.

According to the report, differences in valuations have stalled Alibaba's interest in Flipkart, which incidentally is also interested in ShopClues, since Tiger Global is a common investor in both.

Sources said that former Zynga and Yahoo executive K Guru Gowrappan, who oversees Alibaba's growth in Asian markets (excluding China), is pushing for the M&A talks with ShopClues' senior management.

Gowrappan, who joined Alibaba last year, is finalizing Alibaba's entry strategy as he was about to join the board of One 97 Communications, Paytm's parent company, sources added.

ShopClues co-founder Radhika Agarwal declined to comment about the deal.

"As a company policy, we do not in principle comment on rumours about our business plans in the media. India is an important emerging market with great potential and we are absolutely committed to developing this market for the long term," an Alibaba spokesperson said in an email message." We see the market as a natural progression of our strategy to expand Alibaba's global footprint, and believe that it offers tremendous opportunities for the expansion of our ecosystem for doing commerce globally."

Sources said that ShopClues' management is negotiating for a higher valuation and the valuations of several Indian e-commerce firms will be determined by the sales in the upcoming Diwali festival season.

Meanwhile, Alibaba group has started to Paytm's core payment business with smaller businesses into separate entities.

Alibaba also wants to migrate Paytm into one of the mergers that it is pursuing in India while Paytm is looking at itself as a payments company in the future.