Alibaba said in talks for major stake in Indonesia's largest online marketplace

Employees work at Ltd.'s headquarters in Hangzhou, Zhejiang Province, China.
Employees work at Ltd.'s headquarters in Hangzhou, Zhejiang Province, China.PHOTO: BLOOMBERG

SINGAPORE (BLOOMBERG) - Alibaba Group Holding is in talks to make a major investment in Indonesia's PT Tokopedia, people familiar with the matter said, potentially scoring a second deal to accelerate its expansion into Southeast 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, one of the people said, asking not to be identified because the deal is private. Alibaba, which already controls Singapore-based 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, 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 declined to comment. Tokopedia wasn't immediately available for comment.

China's largest tech firms such as Tencent Holdings are accelerating their investments into Southeast 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's eventual debut.

Alibaba said in June it invested another US$1 billion to raise its stake in Lazada to 83 per cent, securing control of a fast-growing startup at the vanguard of its Southeast Asian expansion. Indonesia alone 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 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.