Alibaba Group confirms its investment in the Chinese food delivery startup Ele.me.
Alibaba Group Holding Limited is currently focused to expand its global footprints in the Indian e-commerce market as well as bolster its already dominating position in the Chinese market. Last week, it spent big to enter in the Southeast Asian market by signing a multi billion dollar deal with Lazada, a venture of Rocket Internet. Apart from this, the Chinese e-commerce giant confirmed its investment of $1.25 billion in a Chinese food delivery start up, Ele.me. For a long time, the company is trying to improve its presence in the online to offline (O2O) market.
It was reported by the Wall Street Journal that Alibaba Group along with its financial arm is all set to invest up to $1.25 billion in Ele.me. Alibaba, on his own, agreed to invest $900 in the Chinese food delivery start up where as the rest will be provided by its financial arm. Initially, the news about this potential move started back in December 2015 where the Chinese tech giant desperately wanted to expand in the online to offline market which currently is the latest thing attracting the online shoppers.
The O2O platform basically allows the traditional and conventional retailers to benefit from the internet technology and expand their reach in the online market. Previously, Alibaba held stake in Dianping Meituan which is the largest Chinese provider of ticket reservations, booking hotels, and other services. The e-commerce leader sold shares which it had in the local deals giant in order to further invest in Ele.me. Alibaba sold $900 million in shares and the move came in as the company found out that its domestic Internet rival Tencent Holdings also has a stake in Meituan Dianping. With Ele.me, Alibaba has a different plan to take things forward.
Tech Crunch reports that Alibaba also has other organizations and synergies on its portfolio. Koubei is one of the joint ventures of the Chinese online retailer that allows the restaurants in the region to offer promotions through smartphone. For that matter, the company signed a $3 billion loan deal for numerous deals. It has a lot of cash on its hands therefore it can surely make several acquisitions in the coming times.
Irrespective of a billion dollar investment by Alibaba and its financial affiliate, Ele.me remains as an independent company for now. The executive vice chairman John Tsai also joined the board of Ele.me.
Analysts believe that Alibaba would surely benefit from this deal sooner or later as it will help the company to take an early lead in the market.
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