(Repeats story with no changes to text)
* Talks on raising fresh funds from China not
* Alibaba could build stake but management control an
* Snapdeal says not up for sale
By Sumeet Chatterjee and Sankalp Phartiyal
HONG KONG/MUMBAI, March 23 Indian online
retailer Snapdeal is seeking investment to shore up its finances
after unsuccessful talks with Chinese funds and Alibaba Group
Holding Ltd as it battles to remain competitive,
sources with direct knowledge of the matter said.
Faced with the prospect of falling cash reserves and little
interest from existing investors such as Japan's Softbank
and U.S. hedge funds, Snapdeal is now increasingly
being seen as an acquisition target, they said.
"Snapdeal has been desperately looking to raise money in
China for the last few months," said a source with direct
knowledge of Snapdeal's plans.
"It had multiple rounds of talks with some Chinese funds and
was also hoping to get some fresh money from Alibaba. But those
talks were not going anywhere and Alibaba made it clear to them
they would not write a new cheque for them given the dim outlook
for making money any time soon."
Both Alibaba, which already has a small stake in Snapdeal,
and Softbank declined to comment.
Its unsuccessful negotiations in China and sliding
valuations may force loss-making Snapdeal to consider an
outright sale, sources said.
Founded in 2010, Snapdeal was valued at $6.5 billion after a
fund-raising last year. But valuations of Indian e-commerce
firms are believed to have softened since then.
"The industry is up for consolidation and Snapdeal maybe the
first one to witness it," said another source who is aware of
"Till what time will Snapdeal continue to survive from
savings? ... Snapdeal is not pushing for any consolidation but
it's for the investors to take that call. They have an
independent way of looking at this."
Bruised by intensifying competition with bigger rivals
Flipkart and Amazon, Snapdeal laid off 600 employees
and its founders are foregoing salaries as it cuts costs to try
to turn a profit.
Snapdeal, however, stressed that it has no intention of
selling the company.
A Snapdeal executive said the board about two weeks ago had
approved a plan to turn profitable and identified a "small gap
in funding." Any fundraising would be intended to strengthen its
finances ahead of a planned listing, which sources say the
company was trying to achieve within two years.
A Snapdeal spokeswoman said the company's efforts were
"focused on driving profitability," and that it was "well
One of the sources who spoke to Reuters said Alibaba was
already in early talks with Softbank, the biggest shareholder in
Snapdeal, but was only interested in increasing its investment
as long as management control goes to Paytm.
Alibaba is the biggest shareholder in Paytm's parent One97.
It picked up a 36.31 percent stake in Paytm's e-commerce unit
for $177 million earlier this year.
"Alibaba is very keen to invest more in Snapdeal as an
entity if the management control goes to Paytm. The proposal has
the backing of Softbank as well, which is also looking to
consolidate its investments in one or two large e-commerce
companies," the first person said.
A deal with Alibaba would make Snapdeal more competitive at
a time when India's top e-commerce company Flipkart is seeking
to raise up to $1 billion and as Amazon last year pledged to
invest more than $5 billion.
Thanks to rapid uptake of wireless high-speed internet,
India's burgeoning middle class is increasingly shopping online,
but steep competition among e-tailers has lead to losses across
Snapdeal has been seen as particularly vulnerable to
increasing competition. The company reported a loss of 29.6
billion rupees in the financial year to March 31, 2016,
according to regulatory filings.
(Additional reporting by Aditya Kalra and Aditi Shah in New
Delhi, Devidutta Tripathy in Mumbai and Liz Lee in Kuala Lumpur;
Writing by Rafael Nam; Editing by Keith Weir)