Alibaba is buying a controlling stake in Lazada for US$1bn
Comprising a mix of old and new Lazada shares in a deal which values Lazada at US$1.5bn. Alibaba has the right to buy out additional shares from existing shareholders over in 12-18 months.
Comment: This deal likely to have positive impact for businesses along the value chain, e.g. logistic, transportation, etc. However, competition will remain tough in the sector and may accelerate consolidation in the space.
- From Logistic & Transportation side - This provide a much needed boost for SingPost, which Alibaba owns an 11% stake. Singpost has been struggling to penetrate Indonesia especially in the last-mile delivery segment. Alibaba-lazada deal could provide an entry point for Singpost. This means a tougher competition ahead for the likes of JNE, Pos Indonesia and other logistic players because Singpost has the know how expertise and big funding to expand compare to the existing players.
- This deal also read positively for Lazada’s warehouse providers, Mega Manunggal Property – MMLP. This deal will strengthen Lazada’s financial position which in turn should enable Lazada to be able to expand more aggressively that likely lead to more demand for warehouse space.
- However, competition in the e-commerce will continue to intensify. Given the big warchest, we may see consolidation in Indonesia’s e-commerce segment sooner later than later. In addition, offline retailers will also continue to see disruption especially in the electronics and fashion department.