14 Apr Alibaba Expands in Southeast Asia: World’s Biggest Online Commerce From China Invested $1 Billion To Lazada
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Billionaire Jack Ma’s Alibaba Group Holding Ltd. to close a deal with Lazada, a company founded by Rocket that operates in Indonesia, Malaysia, Vietnam, Thailand and the Philippines, making its largest overseas investment with $1 billion for control of Lazada Group SA. This is for their goal of shedding its home-market reliance, getting at least half of the company’s revenue from overseas via Lazada adding sales of electronics and clothing in the mentioned six Southeast Asian markets.
In the agreement, Alibaba will be selling a 9.1 percent stake in Lazada keeping an 8.8 percent portion. Also, Alibaba has the option to buy out certain Lazada shareholders in a 12 to 18 month period after the deal closes.
Alibaba remains dependent on China for the vast majority of its business, dominating e-commerce in its home market. And this deal represents a retreat for Alibaba, now targeting Southeast Asia which has no single player that dominates yet.
“It has huge cash sitting on its balance sheet so it can do this kind of investment. It’s also seeking future growth drivers,” said Marie Sun, an analyst at Morningstar Investment Service. “It needs to find some other place for future growth.”
“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,” Alibaba President Michael Evans said.
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