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Alibaba and Partners Take 5.5% Stake in Vietnamese Retail Group

Alibaba led a $400 million investment round in a Vietnamese retail group, signaling its focus on Southeast Asia’s emerging online grocery sector.

The investment round, which included Baring Private Equity Asia, will give new investors a 5.5 percent stake in TheCrownX, the holding company for Masan Group Corp.’s interest in Masan Consumer Holdings and VinCommerce. Masan, which will continue to own an 80.2 percent in the company, is in talks with other potential investors that would invest another $300 million to $400 million in TheCrownX. The Alibaba deal values TheCrownX at roughly $6.9 billion.

Alibaba-owned e-commerce firm Lazada will work with TheCrownX to grow its digital platform to serve customers’ offline and online purchases, the Vietnamese firm said in a statement.

Alibaba acquired a controlling stake in Lazada in April 2016 to further its international expansion plans, and subsequently grew its stake in 2017 and 2018. The Singaporean firm is now one of Southeast Asia’s top e-commerce platform operators.

Groceries and consumables have become a key focus for marketplace firms battling out market share gains as they face competition from the likes of Amazon and Walmart, which bought British supermarket chain Asda in 1999 for $10.8 billion. In October, Walmart sold a majority stake in Asda to the Issa brothers and private equity firm TDR Capital for $8.79 billion in a deal that closed in February. Walmart, which retained a minority stake in the grocery chain, will continue to sell George brand men’s wear through Asda.

The investment news follows Alibaba’s 7.48 billion renminbi ($1.19 billion) loss for the period ended March 31 on revenue of 187.40 billon renminbi ($29.17 billion). The Chinese government’s $2.78 billion antitrust fine contributed to the down revenue, Alibaba said when reporting results on May 13.

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However, international commerce retail business, comprised mainly of Lazada and AliExpress, grew rapidly to 240 million annual active consumers in the 12 months ended March 31. Lazada, in particular, posted triple-digit year-over-year order growth during the fiscal year and fourth quarter. Alibaba said Lazada continued to focus on investing in technology and logistics to enable merchants to better service consumers.

Separately, for its core commerce retail marketplaces, Alibaba said it saw increasing engagement of its existing consumer base on its China retail app platforms.

“The longer a consumer has shopped on our platforms, the more they spend through more orders across more product categories,” the company said.

In fiscal year 2021, the average annual spending per consumer on its China retail marketplaces was over $1,404. Alibaba also said one of the keys to success involves broadening the product supply, including “increasing the range of branded and imported products, going upstream to directly source agricultural products and expanding the breadth of selection of value-for-money and long-tail products.” It also said over 200 luxury brands and retailers, such as Cartier, Farfetch and Gucci, operated their flagship stores on Alibaba’s retail marketplaces as of March 31. And Alibaba said that the Taobao app, the largest social commerce platform in China, offers relevant and curated content that allows merchants to engage consumers through its fast-growing live-stream format, with gross merchandise volume at Taobao Live reach over 500 renminbi, or $76.3 billion, during fiscal year 2021.