Alibaba Holding to Invest in Micromax Or Are These Just Rumors?

Alibaba Holding to Invest in Micromax Or Are These Just Rumors

Alibaba Group Holdings Ltd is ready to penetrate the market of India followed by a rumored investment in Micromax. Micromax, biggest handset vendors in India has been a center of attention for the Chinese giant Alibaba. Alibaba showed its interest of buying a marginal stake of almost $3-3.5 billion.

India’s biggest handset vendors, Micromax will be making use of CyanogenMod in its new ventures instead of its conventional Android OS. Micromax believes that the fresh OS has all the potentials that will put it in race with Android system devices. In September, during the IPO of Alibaba, Jack Ma disclosed the company strategy of global expansion. So buying stake in Micromax will help Alibaba to improve its plan of global expansion.

In a separate new, Jack Ma showed his attention towards handset market earlier this month by making an investment of almost $590 million in Meizu Technology Co. Investment in Meizu will help Alibaba to develop its own operating system a part from YunOs. Likewise acquiring stakes in Micromax will allow Alibaba to expand its operating system usage in markets outside China. Manufacturing costs are rising in China that is pushing Alibaba to look for opportunities that provide more revenue at control cost. India is the market that provides the platforms at reasonable cost.

Jack Ma tactics of steeping in Indian e-commerce market will be beneficial for both the countries, as till the end of the year 2016 India is all set to become the world’s  2nd largest market of smartphone .Analysts at UOB Kay Hian Investment analysts said, “If Alibaba is looking to do worldwide expansion, it has to go after markets with massive population and potential so India is the right choice.”

Micromax and Alibaba have denied talking about the matter and there are chances that the deal will not take place. According to Economic Times, Indian largest handset vendors is “exploring quite a few strategic options” and has standby investors in case Alibaba deals does not occur. Economic times further said that Goldman Sachs has been recommending company about different options one of which is Softbank Corp.

Alibaba Group Holdings limited (NYSE:BABA) share price is green by 1.77%, with stock price of $86.19 at market closed on Wednesday, with 30-days mean volume of 17.41 million shares. The Chinese company has a 52-week low of $82.81, and a 52-week high of $120.00, with market capitalization of $210.92 billion and P/E ratio of 47.87.

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