Amazon CEO Jeff Bezos during his India visit had said he was excited about the potential of the fashion industry in India, and it looks like the Indian arm is already acting on it by beginning talks with Indian fashion e-tailer Jabong to acquire it.
According to a report in The Economic Times, the talks are at a preliminary stage and despite being valued at around $500 million crore in a recent regulatory filing, Jabong is holding out for $700 million given it has other companies in talks with them as well.
Amazon refused to comment on the report but the report quoted a person working with the US e-tailer as saying that Jabong was ideal for acquisition since Flipkart had acquired Myntra in May for around 330 million.
Fashion e-tailer Jabong is part of a global group after its investors German venture capital group Rocket Internet and with Swedish investor Kinnevik announcing a merger of five emerging market fashion start-ups. The merged entity is called Global Fashion Group (GFG) and worth about worth 2.7 billion euros or around Rs 21,000 crore.
The merger was expected to help Jabong raise the much needed capital to take on the Flipkart-Myntra combine, which had recently raised $1 billion. Amazon had also said it would invest $2 billion in India.
During his visit to India, Amazon Bezos had said India was the company's fastest growing geography and he was pleasantly surprised by it. One sector the Amazon CEO said he expected to do well in India was fashion, because of the presence of various regional fashions across the country.
But when it comes to the fashion e-tailer, Amazon might just have to spend a good portion of the $2 billion dollar war chest if it is planning to acquire Jabong.
Jabong may be an attractive acquisition for Amazon given its may be second only to Myntra in the fashion e-commerce space with a gross merchandise value of Rs 509.5 crore this year, almost a three-fold rise from last year, a rising number of unique visitors and a customer base that hails from Tier II and III cities, points out this VC Circle report.
The company's CEO Arun Chandra Mohan has also been pretty optimistic about the company's outlook and had said in a recent interview to The Economic Times, "I believe the valuation of my company is going to be significant. We are going to be a billion dollar business."
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