Alibaba has signed an agreement to purchase a controlling stake in Lazada, an e-commerce platform in South East Asia.
The transaction comprises an investment of approximately $500m in newly issued equity capital of Lazada and acquisition of shares from certain shareholders of Lazada, for a total investment of approximately $1bn by Alibaba.
This deal is expected to help brands and distributors around the world that carry out business on Alibaba's platform, as well as local merchants, to access the consumer market in South East Asia.
Lazada presently operates e-commerce platforms in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
These six countries together have a population of approximately 560 million and an estimated internet user base of 200 million, according to Internet Live Stats.
With only 3% of the region's total retail sales conducted online, South East Asia is expected to offer significant growth potential to both companies as internet penetration continues to rise.
Alibaba president Michael Evans said: "Globalisation is a critical strategy for the growth of Alibaba Group today and well into the future."
"With the investment in Lazada, Alibaba gains access to a platform with a large and growing consumer base outside China, a proven management team and a solid foundation for future growth in one of the most promising regions for eCommerce globally. This investment is consistent with our strategy of connecting brands, distributors and consumers wherever they are and support our ecosystem expansion in South East Asia to better serve our customers."
Lazada Group CEO Max Bittner said: "South East Asia is an attractive mobile-driven consumer market that is highly fragmented and diverse with significant barriers to entry and a nascent modern retail sector that has large headroom for growth.
"The transaction will help us to accelerate our goal to provide the 560 million consumers in the region access to the broadest and most unique 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."
In relation to the deal, Alibaba entered into a put-call arrangement with certain Lazada shareholders, giving Alibaba the right to purchase, and the shareholders the right to sell collectively, their remaining stakes in Lazada at fair market value during the 12-month to 18-month period after the closure of the transaction.
Credit Suisse (Hong Kong) acted as exclusive financial adviser to Alibaba and Goldman Sachs (Asia) as exclusive financial adviser to Lazada.