JAKARTA (TheInsiderStories) – Alibaba Group Holding Ltd., increasing its ownerships in Southeast Asia’s Lazada Group S.A unit. The company set up funds up to US$1 billion to increase its share in the e-commerce player from 51 percent to 83 percent.

Alibaba said it will buy stakes of certain Lazada shareholders at an implied valuation of $3.15 billion. The Chinese firm made an initial investment on April 2016 in Lazada, a leading e-commerce platform in Southeast Asia.

The transaction consists of an investment of approximately $500 million in newly issued equity capital of Lazada and acquisition of shares from certain shareholders of Lazada, for a total investment by Alibaba of $1 billion.

The transaction is expected to help brands and distributors around the world that already do business on Alibaba’s platform, as well as local merchants, to access the Southeast Asian consumer market.

Lazada currently operates e-commerce platforms in Indonesia, Malaysia, the Philippines, Singapore Thailand and Vietnam. These six countries combined have a population of approximately 600 million and an estimated Internet user base of 200 million, according to Internet Live Stats.

With only 3 percent of the region’s total retail sales conducted online, Southeast Asia is expected to offer tremendous growth potential to both companies as internet penetration continues to rise.

“With the investment in Lazada, Alibaba gains access to a platform with a large and growing consumer base outside China, a proven management team and a solid foundation for future growth in one of the most promising regions for e-commerce globally,” said Michael Evans, President of Alibaba in press statement.

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.

“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.” said Maximilian Bittner, CEO of Lazada Group.

Alibaba in Indonesia

The cloud computing arm of Alibaba Cloud has announced that it plans to establish two new data centers in Mumbai, India and Jakarta, Indonesia.

Together with the recently announced data center in Malaysia, Alibaba Cloud will significantly increase its computing resources in Asia, allowing greater support for small and medium enterprises (SMEs) throughout the region with powerful, scalable, cost-effective and secure cloud capabilities.

With the three new data centers planned, Alibaba Cloud will increase its total number of data center locations to 17, covering mainland China, Australia, Germany, Japan, Hong Kong, Singapore, the United Arab Emirates and the United States.

The new Asian data centers will offer a full suite of services, providing the flexibility for enterprises and organizations to build their entire IT infrastructure for business on Alibaba Cloud or run mission-critical and core applications on it.

Alibaba Cloud will be the first leading global cloud computing company to establish an international cloud data center in Indonesia, significantly enhancing the local IT infrastructure on the back of Alibaba Cloud’s global data center network.

The move responds to Indonesia’s “1,000 Start-ups Movement” initiative launched last year with the aim of nurturing 1,000 ventures by the year 2020, and targeting a cumulative valuation of $10 billion.

Founded in 2012, Lazada is the one-stop e-commerce gateway for local and international brands and distributors to consumers in six distinct Southeast Asian markets: Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

By combining its regional presence with locally tailored capabilities in areas such as supply-chain, last-mile delivery and payment, Lazada has developed a unique solution for global brands and distributors wanting to enter this rapidly growing region.

Credit Suisse (Hong Kong) Limited acted as exclusive financial advisor to Alibaba and Goldman Sachs (Asia) LLC as exclusive financial advisor to Lazada.

Based in Singapore, Lazada operates in six markets including Indonesia and the Philippines. Company founder and Chinese billionaire Jack Ma recently traveled to Detroit to make a pitch alongside celebrities such as Martha Stewart, to attract U.S. businesses to sell on its platforms.

 

(Written by Linda Silaen, Email: linda.silaen@theinsiderstories.com)

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