Snapdeal
SnapdealReuters

Two Indian firms could get a boost from tech majors in what might turn out to be the first direct investment in the country by Google Inc and Alibaba.

Chinese e-commerce giant Alibaba is in talks with Indian online marketplace Snapdeal over a potential cash investment, a person familiar with the negotiations said.

The source, who declined to be named because talks are not public, said on Wednesday that negotiations were "ongoing".

Alibaba is "looking, but there's still no deal," the source added.

Alibaba could not be reached immediately for comment, and a Snapdeal representative declined to comment.

Alibaba and Snapdeal have spoken in the past, a second person familiar with the matter confirmed. Investor interest was "high", the source said, without giving any detail on any current negotiations.

Media reports have said Snapdeal is seeking $1 billion in its latest funding round to fuel growth as it competes with bigger rivals Flipkart.com and Amazon.com.

In October last year, Snapdeal secured a $627 million investment from Japan's Softbank, itself an early backer of Alibaba. Alibaba, which has been eyeing the Indian market for months, has yet to invest directly in the e-commerce space.

SoftBank also has an investment in mobile advertising venture InMobi, which is in talks for a Google buyout, a source with direct knowledge of the matter said.

Discussions between Google and InMobi, who have not made their negotiations public, are in early stages. The source, who asked not to be named, said Google had not yet detailed its terms and conditions for the deal.

InMobi helps companies target the users of phones and mobile devices in their advertising.

Google and InMobi were negotiating issues that included how many unique users InMobi has, a key to its value, the source said.

"They are ironing out issues on what InMobi's parameters are, and whether it matches Google's," the source said, adding that InMobi would likely be valued at around $1 billion.

InMobi and Google both declined to comment.

Google Capital, the group's investment arm, has set up shop in India's Silicon Valley, but the parent company has yet to invest directly in the country's Internet and e-commerce sector.

"Advertising is a big revenue generator for Google. As people move from browser or desktop searches, mobile advertising is becoming more important," Neil Shah, an analyst at Counterpoint Technology Market Research, said.