According to McQuaid Group, Chinese e-commerce Goliath, Alibaba Holdings had revealed that it is to buy a controlling stake in online retailer, Lazada to gain exposure to the lucrative Southeast Asian consumer market.

The deal will see Alibaba spend approximately $1 billion which will include $500 million of newly-issued stock and the acquisition of stock held by existing shareholders at an undisclosed premium to its current trading value.

One of the shareholders, internet startup venture capitalist, Rocket Internet will sell a 9.1% holding in Lazada for $137 million in cash but will retain an 8.8% stake. British supermarket company, Tesco will divest itself of an 8.6% stake which will net it $129 million while reducing its holding to 8.3%.

Art Dolan, mergers analyst at McQuaid Group said that Alibaba will be able to provide buyers and sellers on its Chinese platforms with access to the Southeast Asian market.

“There’s also the fact that China is arguably the world’s most developed e-commerce market. The move into the Southeast Asian region will provide future growth drivers outside its core home market while its purchase of Lazada means it can tap into the infrastructure, supply chain, delivery and payment systems they’ve already put in place,” he said.

McQuaid Group hailed the deal as potentially highly-lucrative adding that the market is comparatively under-developed when held against China’s. “Only a handful of larger retailers have begun to exploit the power of e-commerce and even then, there are limited delivery options and some are still accepting cash payments on delivery since many credit cards cannot be used online,” explained Dolan.

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