Aliaba Invests $1 Billion In Lazada Group

Alibaba has announced to invest $1 billion in the Singaporean e-commerce firm to expand its international footprints

Alibaba Group Holding has said to not stop investing in the South Asian markets. The online retailing giant realizes the importance of the new lucrative consumer markets in which it is constantly making deals and acquisitions to strengthen its position. On top of that, the company wants improve its international market presence as at this moment it is currently very low or negligible. Alibaba holds an 80 percent market share in China but it has now switched its mind towards the international markets specifically India, South Korea, and United States of America.

For that matter, the company has announced to agree a deal for buying a controlling stake in Lazada which is a Southeast Asian online retailer. The move comes as a part of its vigorous international market expansion plans. It is believed that the agreed deal is worth at a massive $1 billion from which the newly issued shared in Lazada worth half the investment and the remaining half would be used in acquiring shares from the existing shareholders. Michael Evans, the President of Alibaba, said in a statement that this investment will assist the company to expand its footprints in the Southeast Asia.

He said, “With the investment in Lazada, Alibaba gains access to a platform with a large and growing consumer base outside China, a proven management team and a solid foundation for future growth in one of the most promising regions for e-commerce globally.”

The CEO of Lazada Group, Max Bittner, is also excited with this opportunity and said that he is thrilled with the deal offered by Alibaba Group. He said that the transaction would help Lazada to move closer towards its goal of providing access to more than 560 million customers in the region to the ‘broadest and most unique assortment of products’.

Rocket Internet of Germany had a 17.9 percent stake in Lazada of which it has agreed to sell 9.1 percent stake for $137 million in cash only. It will still keep a hold to the remaining 8.8 percent of its stake in Lazada. Apart from this, Tesco which is one of the supermarket giants in the UK decided to sell 8.6 percent equity stake in the e-commerce firm for $129 million. It keeps the remaining of 8.3 percent stake.

The reason behind buying Lazada is that the e-commerce giant Alibaba wants the buyers and sellers on its platforms to expand their reach of products in the Southeast Asian market. And Lazada has acted quickly acted upon the deal. Reportedly, it has already set up a delivery service, payment options, and supply chains in the regions in which it is doing business.

Marie Sun, who is a senior equity analyst at Morningstar, said in an interview to CNBC that she believes that the e-commerce market in the Southeast Asia is still at an infancy stage and is not developed as of yet if compared to the likes of China and United States. She added, “So if they can dominate the market when the mobile internet penetration increases in the region, Alibaba can benefit in the longer term.”