Alibaba marks foothold in Southeast Asia with Vietnamese retail deal

Alibaba invests in Masan Group's retail business in Vietnam

Alibaba marks foothold in Southeast Asia with Vietnamese retail deal

Alibaba marks foothold in Southeast Asia with Vietnamese retail deal

Southeast Asia will have a new and large e-commerce grocery store. Alibaba Group Holding Ltd plans to invest in Masan Group Corp’s retail business of Vietnam; the deal worth $ 400 million entails interest for business expansion in the e-commerce sector.

The CrownX offers a 5.5% stake to the consortium led by Alibaba and Baring Private Equity Asia. Vietnam, which had over 37 mergers and acquisitions in the previous year had one of the largest deals in the same year with a 12.6% acquisition of CrownX by the Masan Group for $862 million.

As per a statement; the conglomerate will hold 80.2% of the firm after the deal is closed. The pre-investment valuation for The CrownX is $6.9 billion.

The company mentioned that it is planning to inject an additional $300 to $ 400 million in The CrownX in 2021. The conglomerate is one of the largest private sectors holding with the highest market cap.

The Southeast Asian unit Lazada- which is one of the fastest growing online shopping sites with more than 140 million shoppers will be a part of the deal. The e-commerce giant Alibaba and the Vietnamese retail firm will utilize the popularity of Lazada by partnering for digital business expansion.

Vietnam is expanding in economy with steady businesses, its e-commerce business in the pandemic – the previous year has reached $11.8 billion which was higher than 2019 by 18%. The growth accounted for 5.5% of the total retail sales. The country has favorable regulations and improved internet connectivity which attracts many foreign investments.

Due to the present intense regulatory scrutiny of China; Alibaba is trying to expand its business in the growing Southeast Asian country which has over 650 million people and an economic growth forecast of $52 billion by 2025 with an annual increase of 29% from 2020 estimated by Temasek, Bain & Co., and Google.

The online platform Lazada will get groceries from VinCommerce, the pick-up points for the orders made online will be the latter’s physical stores. Almost half of the retail industry in Vietnam is marked by groceries, however, the online business is promising and has huge room for penetration it is a potential and lucrative market.

Danny Le, chief executive officer of Masan Group, said “Our immediate priority is to modernize Vietnam’s grocery market and develop an unparalleled consumer proposition from assortment to shopping experience.”

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