Alibaba, Foxconn and SoftBank invest in Snapdeal

By Nivedita Bhattacharjee and J.R. Wu

MUMBAI/TAIPEI (Reuters) - China's Alibaba Group Holding , Japan's SoftBank Group Corp and Foxconn will lead an investment of $500 million in India's Snapdeal, the online marketplace said on Tuesday, as it seeks to expand in the country's fast growing ecommerce sector.

The move is a vote of confidence from three of the world's biggest technology companies in Snapdeal, which in October got a $627 million investment from SoftBank, also an early backer of Alibaba.

Snapdeal, which bills itself as India's version of Alibaba, did not break out individual investments. EBay Inc , an early backer of the company, is selling part of its stake in a transaction which also involves fresh funding.

Existing investors Temasek, BlackRock, Myriad and Premji Invest also participated in the funding round, Snapdeal said, without giving further details.

EBay said in a statement it has sold a portion of its stake and would focus on boosting its own business in the country.

Separately, FIH Mobile , a unit of Taiwan's Foxconn, the trading name of Hon Hai Precision Industry Co , said it was buying a 4.27 percent stake in Snapdeal for $200 million via its Singapore-based subsidiary Wonderful Stars Pte.

Sources told Reuters this month that the transaction would value Snapdeal at more than $5 billion.

In India, Snapdeal rivals Flipkart, valued at around $15 billion, and Amazon.com Inc's India unit as the three fight it out for a share of a $22 billion market.

Like its rivals, Snapdeal sees the majority of its transactions on smartphones and mobile devices.

"That is why, with a significant share of e-commerce transactions in India being done via mobile devices, the investment positions FIH to benefit from Snapdeal's platform," Foxconn said in a statement.

Alibaba and eBay are also looking to benefit from India's fast growing online sector, boosted by a rise in use of affordable smartphones and internet connections.

Alibaba has said India is a key market for the group.

India is the world's third-biggest smartphone market after China and the United States.

While India has fewer internet users than China, online sales could rise to more than $100 billion in 2020 from $2.9 billion in 2013, making it the fastest-growing market globally, according to a Morgan Stanley report.

(Reporting by Nivedita Bhattacharjee in Mumbai and J.R. Wu in Taipei; Writing by Sumeet Chatterjee; Editing by David Goodman and Keith Weir)