For a long time, Micromax was said to have been gearing up for an IPO, but now the company is reportedly looking at different strategic options including an outright sale of the business, Economic Times reports. The company has also reportedly approached potential buyers that include Chinese e-commerce giant Alibaba and Japan s SoftBank. Also Read - 5 delayed smartphone launches in India due to COVID-19 in May 2021Also Read - Jack Ma's Alibaba fined record $2.7B by China
Micromax s promoters are seeking a valuation of $3-3.5 billion or Rs 21,000 crore, and will only consider an outright sale if this valuation is met. The company was able to surpass its estimates for FY14, by posting an income of Rs 7,142 crore ($1.1 billion). Also Read - Micromax In 1 goes on sale in India today on Flipkart: Top 5 features, price of all variants
As mentioned above, until late 2014, Micromax was believed to have been setting up for an IPO, but is now being advised by Goldman Sachs to peruse other avenues. These include either selling a significant minority stake in the company with a clear milestone-linked roadmap for a change of control in the future, or as mentioned above, an outright sale.
The latter scenario will give bumper exits to Micromax s earlier promoters including the likes of TA Associates, Sequoia Capital, Sandstone Partners and Madison India Capital HC. TA Associates had acquired a 15 percent stake in 2009 for Rs 100 crore, while Sequoia Capital, Sandstone Partners and Madison India Capital HC own 2.68 percent and around 0.4 percent stake respectively.
It isn t surprising to see the smartphone vendor approach the likes of Alibaba and Softbank, which have been open about their intentions to invest in India. Both the companies have recently invested in companies like Paytm and Snapdeal respectively.
Interestingly, Alibaba recently bought a minority stake in Chinese handset maker Meizu Technology Co for $590 million. As a part of the deal, the e-commerce giant is pushing the adoption of its homegrown operating system YunOS through Meizu.
In India, Micromax is fighting for the top spot in the smartphone market with South Korean giant Samsung. A Canalys report recently revealed that the Indian smartphone vendor had overtaken the latter to become the top smartphone vendor in the country. It is a claim that Samsung has diligently rubbished and in fact claims that its smartphone market share is more than double of Micromax.