INSUBCONTINENT EXCLUSIVE:
Alibaba has confirmed that it has raised $3 billion for its new-look local services business after it united its Koubei local services
business with Ele.me, the on-demand delivery business it recently acquired.
The company said it put the capital into the business
alongsideSoftBank, according to a note within its financial results that were released today
TechCrunch understands that the actual amount raised may increase as existing Koubei investors have an option to be a part of the new round,
while new backers may also be added.Bloombergpreviously reported the consolidation and investment.
From the filing:
We have established a
company to hold Ele.me and Koubei as our combined flagship local services vehicle, which we plan to separately capitalize with investments
from Alibaba, Ant Financial and third-party investors
As of the time of this announcement, we have received over US$3 billion in new investment commitments, including from Alibaba and SoftBank
As a result of this reorganization, subject to closing conditions, we will consolidate Koubei, which would result in a material one-off
revaluation gain when the transaction closes.
Koubei, the company local services platform, got a $1.1 billion injection in early 2017 and is
predominantly focused onenabling local commerce
Other investors besides Alibaba includeSilver Lake, CDH Investments, Yunfeng Capital and Primavera Capital.
Ele.me, meanwhile, first landed
an investment from Alibaba two years ago
The e-commerce giant bought it out in April in a deal that valued Ele.me at $9.5 billion
Ele.me is a key piece of Alibaba recent partnership with Starbucks — the on-demand service will be used to deliver coffee to Starbucks
customers across China as the United States coffee giant seeks outnew growth opportunities and competes with rival services.
The deal may
be a footnote in Alibaba Q1 earnings report but it is representative of a new battle that taking place to own China ‘local services&
That is on-demand services such as groceries deliveries, takeouts, movie tickets and other commercial activities within localareas.
Meituan
Dianping, a firm backed by Alibaba rival Tencent, has led the charge into local services
The company was formed from a merger deal involving China two largest group deals sites in 2015 and it has since raised significant capital,
including a $4 billion round two years ago.
Meituan next act is an IPO in Hong Kong, and the ambitious firm has expanded into ride-hailing
to take on Didi Chuxing, bike-sharing via a $2.7 billion acquisition of Mobike, and even Southeast Asia, where it invested in ride-hailing
startup Go-Jek.
Local services — and in particular food delivery — remains its core focus
Alibaba is betting that pairing Koubei with Ele.me, throwing in a couple of billion and adding a dash of SoftBank can give it a strong rival
that can compete for China ‘online to offline& market
Another war is brewing.
Alibaba shrugs off China concerns as revenue jumps 61%
