After much speculation it’s been confirmed that Alibaba and their financial affiliate, Ant Financial, will together invest US$1.25 billion in Chinese on-demand food delivery app Ele.me.
Alibaba will pitch in US$900 million while Ant Financial will add an extra US$350 million to the round. The deal also includes a new partnership between Alibaba’s own on-demand services platform, Koubei, and Ele.me.
The duo now represents Alibaba’s biggest bet in the on-demand market. Alongside the US$1.25 billion injection into Ele.me, the Chinese internet giant also pledged RMB3 billion to growing out Koubei. Ant Financial also committed the same amount to the project.
Alibaba have not revealed further details on the deal, including how much their stake in the food delivery service would be. Last year Chinese financial magazine Caixin reported that the deal being discussed was for a 27.7 per cent stake.
The news comes just months after Alibaba sealed a deal to sell their stake in competing on-demand service Meituan-Dianping, which also happens to be backed by Tencent. The other large competitor in the market is Nuomi, the on-demand platform that search giant Baidu has pledged US$3 billion to improve.
The Ali-Ele.me partnership ties up a lot of loose ends in the highly-contested on-demand market. During the Meituan-Dianping merger last year, and their subsequent US$3.3 billion funding round (which rocketed the company’s valuation to over US$18 billion), there was much speculation over which camp Alibaba would choose and whether they would maintain their stake in Meituan-Dianping.
It’s now clear that China’s deep pocketed tech giants intend on spending heavily through another subsidy-fueled war of attrition in the on-demand space.
The article Alibaba, Ant Financial bet US$1.25 billion on food delivery startup Ele.me first appeared on Technode.