Ratan Tata
Ratan TataReuters

One of India's most successful businessmen Ratan Tata may be eyeing an investment holding in e-commerce firm Snapdeal, with reports suggesting that he is considering buying out a previous investor in the firm through a secondary sale.

This would make Tata the second Indian business tycoon after Wipro's Azim Premji to invest in the four-year-old firm.

Sources aware of the development told The Times of India that Tata had visited the firm's Delhi headquarters last month to address employees, and that he is considering becoming a minority investor in the e-tailer. There has, however, been no confirmation from his office or from the founders of Snapdeal and no clarity on the stake that Tata looks to hold.

Given that online retail in India is booming, with Bangalore-based Flipkart raising $1 billion in funding and global giant Amazon deciding to invest $2 billion for its India operations, Tata's interest in Snapdeal reflects how big businesses are looking for a share. Going by forecasts, their interest seems duly valid. Internet commerce in India is touted to reach $9 billion in the next two years, according to Accel Partners, a US venture capitalist firm. By 2012, online sales of retail goods are expected to hit $76 billion, according to Technopak.

News has already emerged of Premji taking up minority stakes in Myntra and Snapdeal through his family office, PremjiInvest. He, along with a consortium of investors, reportedly put in $100 million into Snapdeal earlier this year.

Infosys co-founder Narayan Murthy has also ventured into e-commerce through a joint venture with Amazon through his investment firm Catamaran Ventures.

Tata's investment could push Snapdeal, which sells five million products to more than 25 millions subscribers, to give tough competition to leaders Flipkart and Amazon, which are currently dominating the e-commerce market in India. Snapdeal 's total capital touched $350 million this year through fundings from its investors including e-bay Inc, BlackRock, Intel, PremjiInvest, Nexus Venture Partners and others.

The firm was started by Kunal Bahl, a Wharton graduate, and Rohit Bansal, an IIT-Delhi pass-out, in 2010 as a daily deals site and was later changed into an online marketplace to allow merchants to sell their products.

Quick Links