Alibaba buys controlling stake in Lazada for US$1b
Print Edition
ALIBABA Group said yesterday that it has acquired a controlling stake in Southeast Asian online retailer Lazada Group for about US$1 billion, its biggest deal overseas, as the Chinese e-commerce giant seeks fertile new turf as growth slows at home.
The investment comprises a US$500 million subscription for newly issued shares and the purchase of stakes from existing shareholders, the company said in a statement.
These include Britain’s biggest supermarket operator Tesco, which said it would sell an 8.6 percent stake for US$129 million, valuing Lazada at US$1.5 billion.
Neither Alibaba nor Lazada specified the size of the stake purchased, but the sales imply a two-thirds holding.
Alibaba also has the option, 12 to 18 months after the deal closes, to buy remaining stakes from Lazada shareholders.
Established in 2012, Lazada is headquartered in Singapore and also operates e-commerce platforms in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. It has about 5.7 million customers and recorded sales of US$433 million in the first half of last year, according to earlier media reports.
“Globalization is a critical strategy for the growth of Alibaba Group and following the investment, Alibaba gains access to a platform with a large and growing consumer base outside China, a proven management team and a solid foundation,” said its President Michael Evans.
China is getting tougher for Alibaba. In the final quarter of 2015, the value of goods transacted on its e-commerce sites rose by its slowest annual rate in more than three years.
The company has been hit by a barrage of issues, including China’s slowest economic growth in a quarter of a century, an effort to clean up fakes and tough competition from smaller rival JD.com Inc, analysts have said.
The deal isn’t Alibaba’s first investment in Southeast Asia. It also has a stake in logistics firm Singapore Post.
“Southeast Asia has a lot of overlap with China in terms of consumer habits, intra-regional trade and tastes,” said Duncan Clark, chairman of investment advisory firm BDA China.
The e-commerce market for business-to-consumer sales across Indonesia, the Philippines, Singapore, Malaysia, Vietnam and Thailand was just US$10.5 billion in 2015, or 1.5 percent of retail volume, according to consultancy firm Frost & Sullivan. By comparison, it accounts for 12 percent of retail in China, and 8 percent in the United States.
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