Alibaba will invest another $1 billion to raise its stake in online mall Lazada Group to 83 percent, securing control of a fast-growing startup at the vanguard of its Southeast Asian expansion.
The Chinese e-commerce leader is buying out most other backers in a deal that values the Singapore-based startup at $3.15 billion, Lazada Chief Executive Officer Maximilian Bittner said, with management and Temasek Holdings remaining as the only other investors. Lazada's previously disclosed backers include British supermarket chain Tesco and Swedish investment company Kinnevik.
Alibaba took control of Lazada last year from Rocket Internet in a $1 billion deal -- its largest overseas move to date. The company Bittner started in 2012 is now pivotal to quickening the Chinese online retailer's forays abroad, fulfilling billionaire co-founder Jack Ma's ambitions of becoming a truly global business.
Lazada's home turf is shaping up to be the next battleground for Alibaba and main Chinese rival JD.com Inc., and Amazon down the road. While still lacking the transport and payments infrastructure crucial to the widespread adoption of e-commerce, the region has become the world's fastest-growing Internet arena, with a populace of more than 600 million getting more comfortable with online shopping and payments.
"Obviously this allows Alibaba to expand its global footprint, giving them unrivaled access to users," Bittner said in an interview. "E-commerce penetration in Southeast Asia is only roughly 3 percent, so the partnership is a great step change."
Lazada covers six countries -- Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam -- and runs about a dozen warehouses and scores of distribution centers from which it conveys goods directly to buyers. The company is competing with well-funded rivals from MatahariMall to Sea Ltd., but Bittner said Lazada can count on Alibaba's expertise.
This year, the two introduced Alibaba's Taobao online bazaar to Singapore via a dedicated website. It also helped Lazada create an online loyalty and services program that offers UberEats and Netflix along with free deliveries from Alibaba's Taobao and online grocer Redmart. It was the first time the U.S. companies have jointly created an online rewards program, Bittner said at the time.
"The e-commerce markets in the region are still relatively untapped, and we see a very positive upward trajectory ahead of us," Alibaba CEO Daniel Zhang said in a statement. "We will continue to put our resources to work in Southeast Asia through Lazada to capture these growth opportunities."
SundayMonday Business on 07/03/2017