HONG KONG: Jack Ma’s e-commerce giant is preparing for a showdown in Southeast Asia. Alibaba is spending another $1 billion to tighten its grip on Lazada. The extra control could be useful as Alibaba confronts increased competition and formidable operational challenges, from logistics to payments.
Just over a year after taking a controlling stake, Alibaba is doubling its investment in the five-year old company. Ma’s $369 billion web group said on Thursday it would buy out two other shareholders, lifting its stake to 83 per cent from 51pc. Lazada will keep its management and brand, and still cooperate with its deep-pocketed parent on things like technology and selling Chinese products.
Lazadas board and governance agreements are not public, so it is hard to gauge how this will change oversight of the company. It is also not clear why Lazadas valuation, as implied by the two deals, has risen nearly 60pc since 2016. But presumably buying out European investors Rocket and Kinnevik makes it easier for Alibaba to make big decisions quickly, and inject more funds if necessary. The only remaining outside partner is Singaporean wealth fund Temasek.
The deal follows Alibabas wider template of investing in stages, and was provided for in the terms of the initial investment. Still, it shows the company is serious about Southeast Asia.