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Alibaba Increases Its Stake in Lazada

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Alibaba increases its stake in Lazada

The slowing Chinese economy and increased competition have prompted the Chinese e-commerce giant Alibaba (BABA) to pursue globalization. Recently, the company’s founder, Jack Ma, came to the US to attract US businesses to sell on its websites.

In the latest move toward globalization, Alibaba has invested an additional $1 billion in Singapore-based e-commerce firm Lazada. The Chinese firm now holds an 83% stake compared with its previous 51% stake in the company. This values Lazada at ~$3.2 billion.

In 2016, Alibaba paid $1 billion to acquire a controlling stake in the Singaporean company. The company already owns two of China’s most popular retail websites, Tmall and Taobao.

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Why Alibaba is interested in Lazada

Lazada was founded in 2011 by Rocket Internet and operates in six countries in Southeast Asia. While the company’s focus is e-retail, the company also ventured into online groceries after Lazada acquired RedMart in 2016. Southeast Asia is laden with opportunities for Alibaba, as consumers in that booming region are seeing higher incomes.

Alibaba stock has risen by a jaw-dropping ~63.9% year-to-date. The Internet titan expects to report record revenues in the current year, the company’s fiscal 2018. It expects revenue growth as high as 49% in fiscal 2018. It reported revenue growth of 56% in fiscal 2017. 

As the graph above shows, the e-commerce giant’s revenues have been soaring since 2010. The company’s revenues have grown 57.2% on a CAGR[1. compound annual growth rate] basis since 2010.

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