Alibaba said to be in talks for stake in Indonesia's Tokopedia

JAKARTA • Alibaba Group Holding is in talks to make a major investment in Indonesia's Tokopedia, people familiar with the matter said yesterday, potentially scoring a second deal to accelerate its expansion into South-east Asia's largest economy.

The Chinese company is in negotiations to lead a funding round in Indonesia's largest online marketplace of up to US$500 million (S$681 million), one of the people said, asking not to be identified.

Alibaba, which already controls Lazada Group, would be joining existing backers SoftBank Group and Sequoia Capital if the financing goes through.

An alliance with Alibaba would likely preclude a deal with JD.com, which was also in talks to invest hundreds of millions of dollars in Tokopedia, a person familiar with the matter told Bloomberg in May.

Representatives for Alibaba and JD did not comment. Tokopedia was not available for comment.

China's largest tech firms, like Tencent Holdings, are accelerating their investments in South-east Asia, the first step in concerted efforts to expand beyond their increasingly saturated home shores.

Alibaba has been the most aggressive of its peers, setting up not just e-commerce operations but also digital payments networks in anticipation of Amazon.com's eventual debut.

  • $681m

    The amount Tokopedia is believed to be raising from a group of investors led by Alibaba.

Alibaba shares were little changed in US trading.

Alibaba said in June that it had invested another US$1 billion to raise its stake in Singapore-based Lazada to 83 per cent, securing control of a fast-growing start-up at the vanguard of its South- east Asian expansion. Indonesia's worth as an e-commerce market is expected to climb to US$65 billion by 2020 from just US$8 billion now, according to a report by Macquarie Research.

Tokopedia was co-founded by Mr William Tanuwijaya, the son of a factory worker, in 2009. The business model is similar to that of Alibaba's Taobao emporium, matching customers with merchants instead of selling products from its own shelves. It raised a then record US$100 million funding round from SoftBank and Sequoia Capital in 2014, heralding Indonesia's coming of age as a bona fide destination for technology investment.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 26, 2017, with the headline 'Alibaba said to be in talks for stake in Indonesia's Tokopedia'. Print Edition | Subscribe