SHANGHAI (AFP) - China's e-commerce giant Alibaba and a financial affiliate part-owned by its chairman Jack Ma will pour nearly US$1 billion (S$1.33 billion) into a local services mobile platform to compete with rival Tencent.
Alibaba and Ant Financial Service Group will each invest US$483.3 million and take 50 per cent stakes in mobile shopping and dining information app Koubei, Alibaba said in a statement emailed to AFP on Tuesday (June 23).
Koubei connects users to businesses and service providers such as restaurants in their immediate area, and will initially focus on food and beverages before expanding into offline retail and healthcare.
Alibaba's rival Chinese Internet giant Tencent has already established a foothold in the field. It acquired 20 per cent of local service provider Dianping in February last year, and followed up four months later by spending US$736 million for a similar stake in 58.com, another such firm.
"Location-based services is a really big market," Li Yujie, Hong Kong-based analyst at RHB Research Institute, told Bloomberg News. "Establishing it as an independent business shows that Alibaba is putting a lot of emphasis on it."
Koubei is not a brand-new platform and was previously operated through Alibaba's consumer-to-consumer platform Taobao. "Consolidating our resources under Koubei allows us to capture opportunities that navigate both the offline and online markets," Samuel Fan, CEO of Koubei, said in the Alibaba statement.
Ant Financial owns Alipay, a PayPal-like service which handles around 80 per cent of online payments in China. It has closed a private placement that would value it at more than US$40 billion, two sources on Friday (June 19) told Bloomberg News, which added Ant Financial was planning an initial public offering next year.
Ant Financial could not be reached for comment. Mr Ma is a significant shareholder in the firm.
Alibaba's Tmall.com is believed to command more than half the Chinese market for business-to-consumer transactions while its Taobao platform holds more than 90 per cent of the consumer-to-consumer market in China.