Micromax is likely to sell between 20 to 26 per cent of its stake to China's Alibaba Group for about $700 million (Rs 42 billion).

The deal involves the sale of a stake of 20-26% to Alibaba Group Holding, the owner of China's leading online payment solutions company Alipay, allowing it to gain entry into one of the world's fastest-growing handset markets.

The transaction is likely to value Micromax at around $3.5 billion (Rs 210 billion) inclusive of debt. The deal may also see the participation of Japan's SoftBank, which has a 32 per cent stake in Alibaba.

Citigroup is advising Alibaba and SoftBank while Micromax is being advised by Goldman Sachs.