On Tuesday, Chinese e-commerce giant Alibaba Group Holding Ltd announced its decision to purchase a US$1 billion stake in Southeast Asian e-commerce outfit Lazada, marking the company's biggest overseas deal to date.
Over the past year, Alibaba has been doing plenty of shopping as business slows in China, reports the Wall Street Journal, picking up several international companies along the way. In December, Alibaba scooped up Hong Kong's South China Morning Post and has had its fingers in several other pots in Singapore, India, Japan and Macau.
The Lazada deal, however, signals a major foray into Southeast Asian markets for the Chinese company. According to Tuoi Tre, Alibaba will purchase US$500 million worth of newly issued shares along with US$500 million shares from previous investors, including German firm Rocket Internet, British supermarket chain Tesco and Swedish investment firm Investment AB Kinnevik.
Though it has not been officially confirmed, the sale implies a two-thirds holding in the Singapore-based company for Alibaba.
While Lazada has had its fair share of ups and downs, the company's growth suggests a promising future for Southeast Asian e-commerce. Operating across Vietnam, Malaysia, the Philippines, Indonesia and Thailand, Lazada's revenue exploded in the first nine months of 2015, growing 81% to US$190 million, while its active customers tripled to 7.3 million. Still, losses for the company were also high, making Alibaba's interest a valuable lifeline for the outfit.
Moving forward, analysts expect Alibaba to bring expertise in the area of logistics to Lazada, which struggles to contend with Southeast Asia's often temperamental internet speeds and weak infrastructure in its delivery services.
For its part, Lazada views the sale as an opportunity to “increase our focus on e-commerce, technology, payments and logistics”, Lazada Group Chief Executive Maximilian Bittner told WSJ.
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