New US$1b deal marks major increase in Alibaba’s stake in Lazada
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New US$1b deal marks major increase in Alibaba’s stake in Lazada

LAZADA just received a massive investment from Alibaba, which already owns a majority stake in the Southeast Asian e-commerce company, amounting to nearly US$1 billion in a deal that will increase the latter’s stake from 51 percent to 83 percent.

TechCrunch reports that this deal, the second Alibaba is making after its initial US$1 billion investment in April 2016, will raise Lazada’s valuation to US$3.15 billion. In the deal, existing backers – except Singapore’s sovereign fund Temasek and the Lazada management team – will sell their shares to Alibaba.

Lazada CEO Max Bittner told TechCrunch the new valuation represents “a significant uptick” and signals great performance by the company.

He added: “It also reflects that Alibaba continues to be extremely positive about this region, doubling down on Southeast Asia and seeing the potential.”

Deal Street Asia notes that the deal comes as Indonesia’s Tokopedia, the largest online marketplace in the country, is preparing to announce an investment from JD.Com, Alibaba’s fiercest rival. While the sum JD will be investing has not yet been disclosed, reports say it is in the hundreds of millions.

The investment is part of Alibaba’s aggressive push into the region. Earlier this year, the tech mammoth announced that it chose Malaysia as a base to set up its trade and logistics hub, its first e-hub outside of its home country.

Malaysia is a significant base for both Alibaba and Lazada. For the e-commerce company, Malaysia has had a 100 percent growth in merchandise volume year-on-year compared to the rest of its operations in the region.

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But e-commerce throughout the SEA region is growing rapidly thanks to Internet advancements. According to a report co-authored by Google in 2016, e-commerce in SEA is forecast to grow to reach US$88 billion per year in 2025, a major increase from US$5.5 billion in 2015.

It’s this growth that has piqued Alibaba’s interest even more, spurring it to diversify its revenue portfolio. Daniel Zhang, CEO of Alibaba Group, said in a statement: “The e-commerce markets in the region are still relatively untapped, and we see a very positive upward trajectory ahead of us. We will continue to put our resources to work in Southeast Asia through Lazada to capture these growth opportunities.”