Alibaba-Ant Financial Invest in Food Delivery Startup Ele.me

Chinese e-commerce giant Alibaba Group Holding Limited BABA and its finance affiliate, Ant Financial, have jointly invest a total of $1.25 billion in Chinese online food delivery startup, Ele.me

Ele.me is a website that offers customer-to-customer meal ordering services. It is also part of China’s online-to-offline (O2O) trend, where consumers use their smartphones to vail of offline services like booking a taxi rides to access restaurant review apps.

In Dec 2015, a leading business weekly Caixin revealed that an investment of $1.25 billion (roughly INR8,323 crores) in Ele.me would give Alibaba a 27.7% stake in the startup, making it Ele.me’s largest shareholder.

The latest investment will lend Alibaba a competitive advantage in China’s rapidly growing e-Commerce market against the likes of search giant Baidu BIDU, Meituan-Dianping and Alibaba’s own platform Koubei.

Looking Ahead

Alibaba has been focusing on expanding beyond its e-commerce business. Thus, the company is presently focusing on O2O services which are deemed to be the next big thing in China’s e-Commerce space.

In this regard, in early 2015, Alibaba and Ant Financial agreed to invest around $483 million each in a new mobile shopping and dining information app Koubei.com, which would focus on China’s fast growing food-delivery market. In Nov 2015, Alibaba signed a deal to acquire Chinese Internet TV platform Youku Tudou Inc., also known as China’s YouTube, in an all-cash transaction.

Meanwhile, research firm iResearch estimates a 30% per year growth rate for China’s O2O food delivery market which will likely cross the $32 billion mark by 2017.

Currently, Alibaba has a Zacks Rank #3 (Hold). Better-ranked stocks in the same space are Travelport Worldwide Limited TVPT and Stamps.com Inc. STMP, both sporting a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.

[Source:- Yahoo]