eBay, a major investor in the India's second largest online retailer Snapdeal, is planning to sell its stake in the e-commerce firm to focus on expanding its own business in the country.
The US-based online retailer plans to sell nearly 30% of its stake in Snapdeal, sources said.
eBay's stake stood at around 9% in Jasper Infotech Pvt Ltd, the owner of Snapdeal, following an investment of $627 million by Japan's SoftBank Group in the e-commerce firm in October 2014.
"Foxconn is buying some of eBay's stake," a source told Livemint.com.
eBay is expected to use the funds raised from selling its stake in Snapdeal to improve its business in India. eBay has been stepping up its investments in the country for the past six months and has invested Rs 430 crore in eBay India Pvt Ltd since March, the documents filed with the registrar of the company showed.
"With so many new investors coming in, eBay was reduced to being a small shareholder. Hence it is a good time for eBay to do a secondary sale," said Sanjeev Krishnan, transaction services and private equity leader at PricewaterhouseCoopers India.
eBay forayed into Indian market by acquiring Baazee.com in 2004, but could not catch up with the growth of top players--Flipkart, Snapdeal and Amazon--due to "lack of focus and funding" by its parent company in the US.
"It only makes sense to hold on to the stake if you have the vision or intent to leverage the business. But eBay's plans have been ambivalent and they were getting left out because of the competition," Krishan added.
Earlier this month, a Bloomberg report said that Snapdeal was planning to raise nearly $500 million, with Chinese Alibaba Group and Foxconn as the main investors. The report said that Snapdeal would be valued at around $5 billion.
On Tuesday, Snapdeal confirmed receiving a funding of $500 million from Alibaba Group, Foxconn and SoftBank. The deal also saw the participation by its existing investors Temasek, BlackRock, Myriad and Premji Invest.