To capture the e-commerce growth opportunity in nascent Southeast Asia market, Alibaba Group Holding Ltd. will pump in $1 billion in online mall Lazada Group, raising its valuation to 3.15 billion. The move will raise Alibaba’s stake to 83 percent from existing 51 percent.
China e-commerce giant had invested $1 billion last year at a valuation of $1.5 billion. The deal witnesses Alibaba buy shares from existing backers, including Rocket
Internet and the Lazada management team.
Speaking about the deal Lazada CEO Max Bittner to Techcrunch said that the deal is reflection of performance and traction that Lazada has seen. It also reflects that Alibaba continues to be extremely positive about this region, doubling down on Southeast Asia and seeing the potential.
Lazada was founded by Rocket Internet in 2012, at present Lazada serves six countries -Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam in
outheast Asia. Earlier, it focused in online commerce, but later it expanded into e-groceries with the acquisition of Singapore-based Redmart last year.
It also launched an Amazon Prime-style membership in partnership with Uber and Netflix in a move viewed at rivaling Amazon, which is plotting an entry into Southeast
Asia before the end of this year.
Lazada was Alibaba’s largest overseas deal till date. This is also seen as Alibaba’s move to gain prominance in Southeast Asia market. “The e-commerce markets in the
region are still relatively untapped, and we see a very positive upward trajectory ahead of us,” Alibaba Chief Executive Officer Daniel Zhang said in a statement.
According to 2016 report by Google, e-commerce in the Southeast Asia region is on track to grow to reach $88 billion per year in 2025, up from $5.5 billion in 2015, as
internet access becomes more widespread thanks to growing sales of smartphones.
E-commerce penetration in Southeast Asia is estimate to be 3 percent.
Over the years, Alibaba has established its dominance of China and Amazon has taken the lead in the US, both are looking to make their mark overseas. Amazon has made a
long stride in India and its entry to Southeast Asia will create a new front for its battle with Alibaba.