Alibaba to invest $1 billion more in Lazada to speed up Asian drive

The Chinese e-commerce firm took control of Lazada last year from Rocket in a $1-billion deal

Alibaba Group Holding will invest another $1 billion to raise its stake in online mall Lazada Group SA to 83 per cent, securing control of a fast-growing start-up 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 start-up at $3.15 billion, Lazada Chief Executive Officer Maximilian Bittner said, with management and Temasek Holdings remaining as the only other investors. Lazada backers Rocket Internet SE and Investment AB Kinnevik said on Wednesday they were among the sellers. The start-up’s previously disclosed backers also include British supermarket chain Tesco Plc.

Alibaba took control of Lazada last year from Rocket 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, and Amazon.com 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 per cent, so the partnership is a great step change.”

Amazon hasn’t yet voiced its intentions for Southeast Asia, but the industry expectation is that its constant quest for growth will lead it there as early as this year. Now that Alibaba’s established its dominance of China and Amazon has taken the lead in the US, both are looking to make their mark overseas. JD, whose preference for building its own distribution more closely mirrors Amazon’s, is also said to be in talks to invest hundreds of millions of dollars in Indonesian online marketplace Tokopedia.

Alibaba — which despite its sheer scale still derives most of its revenue from China — has been the most aggressive thus far. It’s amassing a regional presence in anticipation of Amazon’s eventual entry, starting with 51 per cent owned Lazada. Ma traveled to Kuala Lumpur in March to declare Malaysia its first logistics hub outside of China, a centralised warehousing and distribution launchpad for the region.

Bloomberg