Amazon to acquire Jabong.com, say reports

<p>Indian online retailers are the flavor of the season after Alibaba’s eye-popping valuation post-IPO</p>

Global online retailing giant Amazon may be about to acquire Jabong.com, an Indian online fashion retailer, for an estimated US$1.2 billion (£760 million), according to a report by DNA Analysis, which cited VCCircle.

Major existing investors in Jabong.com include Rocket Internet, UK Development Finance Institution CDC and Swedish VC firm Kinnevik.

Merger and acquisition activity, and private equity deals, have taken off in India after Alibaba’s September IPO, which revealed the massive valuations possible for early movers in online retail in emerging countries. 

There has been a battle to garner market share through inorganic growth, spurring deals such as Flipkart’s May 2014 acquisition of e-retailer Myntra for an estimated Rs 2000 crores (£205 million). 

Last month, Softbank, which is owned by Japanese billionaire Masayoshi Son, and is the largest shareholder in Alibaba Group Holding Ltd (NYSE:BABA), plonked down a US$627 million investment in Indian online retailer Snapdeal. “We believe India is at a turning point in its development and have confidence that India will grow strongly over the next decade,” SoftBank Chairman Masayoshi Son said at the time. 

The total online retail market in India has the potential to touch US$32 billion by 2020, according to DNA Analysis. Flipkart, which is India’s largest e-retailer, and said to have a 50 per cent market share, is likely looking to raise US$1.5 billion (£0.95 billion) in a January 2015 funding round, according to an Economic Times report earlier this month. Flipkart has already raised US$1.2 billion this year, and is deploying the amount for broadening its reach across more retail categories, particularly fashion. 

Jabong.com is focused on fashion retailing, betting on huge online sales of products from top retail lines. It offers over 1,000 brands and clocked sales (Gross Merchandise Value, or ‘GMV’) of US$300 million during the last financial year.

Jabong was founded in 2012 by entrepreneurs Lakshmi Potluri, Praveen Sinha, and Arun Chandra Mohan.

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