Alibaba Group Holding Ltd (NYSE:BABA) Captures $1 Billion Controlling Stake In Ecommerce Platform Lazada

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The e-commerce giant looks to Southeast Asia with its latest acquisition of Lazada Group

Alibaba Group Holdings Ltd. (NYSE:BABA) is on a buying spree of late and its latest acquisition, which saw it plough another $500 million into a new e-commerce platform, will see it possess a controlling interest in Lazada Group with approximately $1 billion of committed capital.

The investment was made publicly earlier today, in a joint statement from the two companies. According to analysts who were contacted by Bloomberg for comments, the investment makes sense as Alibaba currently holds massive amounts of cash in reserve but needs to find other avenues of growth to keep its growth story alive.

A filing on the London Stock Exchange (LSE) states that the purchase was made in part from the British retail giant, Tesco, which sold approximately 8.6% of its direct stake in the company, leaving it with about 8.3%. Other large market share sellers include German start up builder, Rocket Internet and investment company AB Kinnevik.

Lazada controls a growing user base of customers outside China, something that is, at the very least, an excellent opportunity for the e-commerce giant to diversify its consumer base, as well as push for further growth even as China continues to slow in the short term.

The key markets that Lazada operates in include Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines. It acts as an intermediary for consumers and retailers in the market, something that has seen it build a significant market presence in an increasingly competitive online marketplace in Southeast Asia.

Alibaba currently has an open-ended agreement to be able to purchase and other stakeholders the right to sell their stake in the company over the next 1-1.5 years, should they desire to do so.

Alibaba is still reeling in from a massive economic upset in China since the beginning of 2016, but as world markets move higher, it is expected to continue leveraging its strong balance sheet into long term growth and diversification of its assets overseas.

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