Alibaba Is Said in Talks for Stake in Indonesia's Tokopedia

  • The online mall is said to be raising up to $500 million
  • An investment will extend Alibaba’s expansion into the region

Alibaba Group Holding Ltd. is in talks to make a major investment in Indonesia’s PT Tokopedia, people familiar with the matter said, potentially scoring a second deal to accelerate its expansion into Southeast Asia’s largest economy.

The Chinese company is in negotiations to lead a funding round in Indonesia’s largest online marketplace of up to $500 million, one of the people said, asking not to be identified because the deal is private. Alibaba, which already controls Lazada Group SA, would be joining existing backers SoftBank Group Corp. and Sequoia Capital if the financing goes through.

An alliance with Alibaba would likely preclude a deal with JD.com Inc., which was also in talks to invest hundreds of millions of dollars in Tokopedia, a person familiar with the matter told Bloomberg in May. Representatives for Alibaba and JD declined to comment. Tokopedia wasn’t immediately available for comment.

China’s largest tech firms such as Tencent Holdings Ltd. are accelerating their investments into Southeast Asia, the first step in concerted efforts to expand beyond their increasingly saturated home shores. Alibaba has been the most aggressive of its peers, setting up not just e-commerce operations but also digital payments networks in anticipation of Amazon.com Inc.’s eventual debut.

Alibaba shares were little changed in U.S. trading.

Read more: China’s Road to World Tech Domination Begins in Southeast Asia

Alibaba said in June it invested another $1 billion to raise its stake in Singapore-based Lazada to 83 percent, securing control of a fast-growing startup at the vanguard of its Southeast Asian expansion. Indonesia alone as an e-commerce market is expected to climb to $65 billion by 2020 from just $8 billion now, according to a report by Macquarie Research.

Tokopedia was co-founded by William Tanuwijaya, the son of a factory worker, in 2009. The business model is similar to that of Alibaba’s Taobao emporium, matching customers with merchants instead of selling products from its own shelves. It raised a then-record $100 million funding round from SoftBank and Sequoia Capital in 2014, heralding Indonesia’s coming-of-age as a bona fide destination for technology investment.

Read more: Factory Worker’s Son on Path to Build $1 Billion Web Startup

— With assistance by Lulu Yilun Chen, and David Ramli

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