SoftBank In Talks To Pick 20pc Stake in Micromax At $1B Valuation


Micromax Sends Out Feelers to Alibaba, Softbank. Considering Partial/ Complete Sellout

The rumours that have been around for past few weeks seem to be partially true – Now, according to Reuters report, Japanese Behemoth Softbank is currently in talks with India’s second largest Smartphone manufacturer Micromax to buy 20 percent stake for reportedly USD 1 Billion. Reuters has cited unnamed sources who are aware of the discussions.

In regards to this development, both Softbank as well as Micromax declined to comment.

We had reported in February that Micromax has been sending out feelers to Alibaba and Softbank for partial or complete sell-out. However, it seems that Alibaba has fallen out of the race, and Softbank seems to be serious about it.

If the deal with Softbank goes through, Micromax will be valued at USD 5 Billion, which is far more than 3-3.5 billion valuations that were being talked about for IPO. The talks of Micromax IPO have been around since 2011, but at this juncture, it is quite clear that they are not looking to go public.

Micromax has been growing at rapid pace over last 5 years or so, and reports from Canalys and counterpoint last year even stated that they had overtook Samsung to become the largest smartphone manufacturer in India. However, reports from IDC and Gartner still put Samsung ahead of Micromax in their reports.

Major Shareholders in Micromax

Micromax was founded in 2000 by four entrepreneurs- Rahul Sharma, Rajesh Agarwal, Sumeet Kumar and Vikas Jain—to supply mobile phone parts to Nokia. Taking rapid strides, the company soon started making affordable but feature-rich branded handsets of its own and became a force to reckon with in the Indian market, inspite of Apple and Samsung sitting pretty on the top of the table.

In 2010, the company got funds worth Rs 225 crore from TA Associates after being valued at Rs 1,500 crore. Buying up 15 percent of the company, the investing firm came on board five years back.

Sandstone Capital and Sequoia Capital own a 2.68% stake each. A 0.4% share is owned by Madison India Capital while China based Spreadtrum Communications, a fab-less semiconductor provider, also went on to invest $10 million in the company in 2012.

At present, the four founder owners own a little less than 80% of the company. Last year when the company was thinking in terms of an IPO, they had gone on to hire Bharti Airtel veteran Badal Bagri, former Bharti Airtel top honcho Sanjay Kapoor and Samsung India mobile head Vineet Taneja, hoping they together would help propel the company to greater heights and build a bigger brand before an IPO.

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