Alibaba's Snapdeal Investment
Alibaba Group Executive Chairman Jack Ma on 3 March.Reuters

Alibaba Group Holdings could walk away from discussions that may have triggered the Chinese e-commerce giant's first direct investment in India.

Alibaba could ditch plans to invest in Indian online marketplace Snapdeal, one of two large homegrown e-commerce firms, over valuation disagreements, the Press Trust of India (PTI) reported.

The planned deal, pegged at about $500m (£338.9m, €471.4m) to $700m, hit a roadblock after the two sides failed to agree on Snapdeal's valuation. Alibaba valued the Indian firm at between $4bn to $5bn, as against a $6bn to $7bn valuation sought by Snapdeal, PTI reported.

A US-based investment banker told the news agency that private equity and venture capital firms remain "hugely" interested in investing in e-commerce in India, but were adopting a cautious approach as they feel valuations are being "pumped up" to "exorbitant" levels.

The banker said: "While acquiring [a] stake in Snapdeal would have been a good deal for Alibaba, the high valuation could have forced it to back off."

Technology website Recode was the first to report the news.

Snapdeal competes in India with bigger rivals Flipkart.com and Amazon.com, and media reports said it had sought $1bn in its latest funding round to boost growth.

Alibaba and Snapdeal's talks, however, did not involve a deal close to the $1bn number reported, Recode reported.

Snapdeal's investors include Japan's Softbank and eBay.

Ant Financial-One97 deal

Last month, Alibaba's financial services affiliate announced that it will buy a minority stake in Indian payment services provider One97 Communications.

Ant Financial Services Group agreed to acquire 25% of One97, the companies said in a statement without disclosing the value of the deal.

The stake is worth over $500m and the investment is a precursor to a likely One97 initial public offering (IPO), Reuters reported.

One97 runs Paytm, an m-commerce platform that allows users to shop or pay utility bills. The deal reportedly valued One97 at over $2bn.

The $2bn valuation of operator One97 compares with the $11bn of Flipkart Online Services, India's largest e-commerce firm.