Alibaba Invests $2bn in Southeast Asian Online Mall Lazada

Alibaba said on Monday that it will invest additional $2 billion in Lazada Group SA. It is an effort to try to accelerate its growth in Southeast Asia.

Alibaba acquired Lazada in 2016 with an investment of $1 billion. It increased its stake to 83% with another $1 billion investment in 2017.

In total, Alibaba now have $4 billion of investment to Lazada. The Singapore-based online mall has operations in Indonesia, Malaysia, the Philippines, Thailand, Vietnam, and Singapore.

Logo of Alibaba Group is shown with several notes posted around it.
Alibaba Group plans to expand its business in Southeast Asia

Supported by large cash piles and soaring stock prices, Alibaba is prepping up to take on the fastest-growing markets for online shopping in Southeast Asia. It is where Amazon.com Inc. has launched in Singapore, and Sea Ltd.’s Shopee is expanding to win consumers. The new investment fuels the cash burning business much needed funds for technology development and customer acquisition.

“The investment is expected to deepen Lazada’s integration into the Alibaba ecosystem. It will enable Lazada to tape into Alibaba’s resources to further serve consumers and empower merchants in Southeast Asia in innovative ways,” Alibaba said in a statement.

Alibaba considers Southeast Asia as an important aspect of its global expansion

Chinese rival JD.com Inc. also targets the thriving region. JD CEO Richard Liu has promised to be in every Southeast Asian country before the end of the year.

“The investment underscores Ablibaba’s confidence in the future success of Lazada’s business and the growth prospect of the Southeast Asian market, a region that is a key part of Alibaba’s global growth strategy,” said Alibaba.

Investment firm Temasek Holdings and the Lazada management are the other stakeholders in the e-commerce firm. Last year, Rocket Internet and Kinnevik exited their investment in Lazada by selling their stakes to Alibaba.

Alibaba has also other deals in Southeast Asia. These include leading a $1.1-billion funding round in Indonesia’s Tokopedia last year.

Alibaba’s shares dropped 1.45% to $197.37 in pre-market trading. Its shares previously closed higher at $200.28, rising 0.61% in the previous trading session.

Alibaba Announces New CEO

Company announced that co-founder Lucy Peng will take over as chief executive officer. She’s the current chairwoman of Lazada.

“With a young population, high mobile penetration and just 3% of the region’s retail sales currently conducted online, we feel very confident to double down on Southeast Asia,” said Peng.

Lazada is well-positioned for the next phase of development of Internet-enabled commerce in this region, and we are excited about the incredible opportunities for supercharged growth.”

Current CEO Max Bittner will step down from the position. But, he remains as a senior adviser for the company. He will “assist in the transition and future international growth strategy.”

“Alibaba’s new commitment of capital and resources is good for Lazada and good for the Southeast Asia e-commerce market,” Bittner said in a statement.

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