SINGAPORE (BLOOMBERG) - Alibaba Group Holding will invest another US$1 billion (S$1.38 billion) to raise its stake in online mall Lazada Group to 83 per cent, securing control of a fast-growing start-up at the vanguard of its South-east Asian expansion.
The Chinese e-commerce leader is buying out most other backers in a deal that values the Singapore-based start-up at US$3.15 billion, Lazada CEO Maximilian Bittner said, with management and Temasek Holdings remaining as the only other investors. Lazada's previously disclosed backers include British supermarket chain Tesco and Investment AB Kinnevik.
Alibaba took control of Lazada last year from Rocket Internet in a US$1 billion deal - its largest overseas move to date. The company Mr Bittner started in 2012 is now pivotal to quickening the Chinese online retailer's forays abroad, fulfilling billionaire co-founder Jack Ma's ambitions of becoming a truly global business.
Lazada's home turf is shaping up to be the next battleground for Alibaba and main Chinese rival JD.com, and Amazon.com down the road. While still lacking the transport and payments infrastructure crucial to the widespread adoption of e-commerce, the region has become the world's fastest-growing Internet arena, with a populace of more than 600 million getting more comfortable with online shopping and payments.
"Obviously this allows Alibaba to expand its global footprint, giving them unrivalled access to users," Mr Bittner said in an interview. "E-commerce penetration in South-east Asia is only roughly 3 per cent, so the partnership is a great step change."
Amazon hasn't yet voiced its intentions for South-east Asia, but the industry expectation is that its constant quest for growth will lead it there as early as this year.
Alibaba - which despite its sheer scale still derives most of its revenue from China - has been the most aggressive thus far. It is amassing a regional presence in anticipation of Amazon's eventual entry, starting with 51-per-cent-owned Lazada.
Mr Ma travelled to Kuala Lumpur in March to declare Malaysia its first logistics hub outside of China. Indonesia, the world's fourth-most populous nation, is considered among the most promising markets in the region.
Lazada itself covers six countries - Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam - and runs about a dozen warehouses and scores of distribution centers from which it conveys goods directly to buyers.