Alibaba Group said Wednesday it will invest about $1 billion to lift its stake in Lazada Group to around 83% from the current 51%, citing confidence in the growth potential of Southeast Asian markets and Lazada’s business.
With the move, Alibaba also reaffirms its commitment to the region as part of its strategy to globalize operations.
Alibaba said in a statement it will buy shares from certain Lazada shareholders at an implied company valuation of $3.15 billion, reflecting a “significant increase” in Lazada’s value from when Alibaba took a majority stake in April 2016. The transaction increases Alibaba’s investment in Lazada to over $2 billion.
Lazada has been a key element of Alibaba’s expansion of its global footprint. The two have collaborated over the past year, giving them unrivaled access to the approximately 560 million consumers in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. And yet, with only 3% of the region’s total retail sales done online. Southeast Asia remains a hotspot for growth.
“As a market leader, Lazada has demonstrated its ability to execute and further lead the region in products and services with the best consumer experience in Southeast Asia while growing a strong ecosystem that supports small businesses going online,” said Daniel Zhang, CEO of Alibaba Group. “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.”
Alibaba has so far provided scale, e-commerce know-how and technological expertise to support Lazada’s efforts. That has allowed Lazada to invest further in the marketplace, technology, payments and logistics, enhancing its services and the customer experience. Lazada has also focused on supporting the region’s merchants, many of whom are small businesses.
Specifically, Lazada and Alibaba have established an e-fulfillment center in Malaysia as part of Alibaba’s Electronic World Trading Platform, advancing “Thailand 4.0” and launching Taobao Collection in Singapore and Malaysia, giving local customers access to high-quality products from China.
“Thailand 4.0″ is a government initiative aimed at turning Thailand into a high-income nation, but one that’s inclusive and focuses on sustainable growth and development.
“I couldn’t be more excited to deepen our relationship with Alibaba,” said Maximilian Bittner, CEO of Lazada Group. “With their support, we will continue to empower brands and sellers to offer a wide selection of unique assortment to consumers across Southeast Asia while delivering an exceptional customer experience backed by our best-in-class logistics network.”