The deal consists of an investment of about US$500 million in newly issued equity capital of Lazada and acquisition of shares from certain shareholders, for a total investment of about US$1 billion, said Bernama in a news report.
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, the company said in a statement.
Lazada currently operates e-commerce platforms in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, which together have a combined population of about 560 million and an estimated Internet user base of 200 million.
Alibaba said that with only 3% 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.
Alibaba president Michael Evans said the investment in Lazada gives the group access to a platform with a large and growing consumer base outside of China.
“This investment was consistent with our strategy of connecting brands, distributors and consumers wherever they are and support our ecosystem expansion in Southeast Asia to better serve our customers,” he said.
Lazada chief executive officer Max Bittner said the deal will help Lazada accelerate its goal to provide consumers in Southeast Asia access to the broadest assortment of products.
“Furthermore, leveraging Alibaba’s unique knowhow and technology will allow us to rapidly improve our services and provide an even more effortless shopping and selling experience,” he said.
The agreement entails Alibaba entering into a put-call arrangement with certain Lazada shareholders, giving it the right to purchase their remaining collective stakes in Lazada at fair market value during the 12- to 18-month period after the closing of the transaction.