Alibaba has acquired a majority stake in Southeast Asia-based ecommerce platform Lazada, stating that it expects to see strong growth in the region.
The transaction values Lazada at around $1.5 billion and was made up of $500 million in newly issued equity capital of Lazada and the acquisition of shares from certain shareholders of Lazada, for a total investment by Alibaba of almost $1 billion.
The Chinese ecommerce giant will now have a large foothold in a region that is increasingly online but has historically been challenging due to logistical issues and a lack of warehousing outside markets like Singapore.
The move also represents the wider globalisation plans of Alibaba, which has been spending cash to help it move into markets outside China. Earlier this year it surprised the market by buying 33 million shares in daily deals site Groupon.
Michael Evans, president of Alibaba, said: “Globalisation is a critical strategy for the growth of Alibaba Group today and well into the future.
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 ecommerce globally. This investment is consistent with our strategy of connecting brands, distributors and consumers wherever they are and support our ecosystem expansion in Southeast Asia to better serve our customers.”
According to Alibaba, Lazada runs ecommerce platforms in Indonesia, Malaysia, the Philippines, Singapore Thailand and Vietnam. Citing Live Stats data, it said the six countries combined have a population of 560 million and of those almost 200 million are online. It says just 3% of retail sales are done online, representing a significant growth opportunity.