Alibaba is about to invest $4.63 billion in a Chinese company

alibaba staff

Alibaba will invest approximately RMB28.3 billion (US$4.63 billion) for a 19.99 per cent stake in Suning, one of the largest consumer electronics retail chains in China. After the closing of the investment in Suning, Alibaba will be the second-largest shareholder in the company.

As part of the agreement with Alibaba’s investment in Suning, Suning will invest up to RMB14 billion (US$2.28 billion) to subscribe for up to 27.8 million newly issued ordinary shares of Alibaba. After the investment, Suning will hold approximately a 1.1 per cent interest in Alibaba’s enlarged issued and outstanding share capital.

The deal is intended to better connect Internet users with bricks-and-mortar offerings, as well as expand Alibaba’s e-commerce services.

The deal will also see Alibaba explore more online-to-offline and offline-to-online commerce opportunities.

Consumers will be able to have a physical experience with the product in store, while at the same time being able to operate other areas – such as ordering and payment – through their own mobile device.

“Over the past two decades, e-commerce has become an inextricable part of the lives of Chinese consumers, and this new alliance brings forth a new commerce model that fully integrates online and offline. This alliance will benefit consumers and merchants by cultivating an open and transparent integrated ecosystem that will be the backbone of the future economy,” said Jack Ma, Executive Chairman of Alibaba Group.

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