Alibaba and Ant Financial Invests $1.25 Billion in Chinese Food Delivery Service Ele.me
Chinese food delivery service Ele.me has received a new investment from Alibaba Group Holding, along with its finance payment unit Ant Financial. In total, the new fund reached the amount $1.25 billion to support the food delivery service establish its existence and profile in China.
The $1.25 billion fund consists of $900 million from Alibaba, while Alibaba's payment company Ant Financial contributed $350 million to the investment. Upon receiving the fund, Alibaba executive vice chairman Joseph Tsai gained the right to be appointed as Ele.me's board. The online food delivery service company will continue to operate independently.
According to Reuters, the new investment will help boost Ele.me's profile in the competitive market of online food delivery in China. Its rivals in the market include Baidu Inc., Meituan-Dianping, and Alibaba's Koubei. Ele.me itself is one of the top key player in Chinese online food delivery market controlling about a third of the market per reports of November 2015.
Ele.me is facing deep-pocketed rivals in China, where the startup scene is heating up. Its rival Meituan-Dianping had recently secured $3.3 billion of investment. The financing round is considered one of the largest private tech funding rounds.
Ele.me itself has already raised billions in previous funding rounds. In November, the company raised funding from Chinese ride-hailing service company Didi Kuaidi, as reported by Forbes. Last August, the company also raised fund from a group of investors at a $3 billion valuation.
Alibaba's move in investing in the online food delivery service is part of the bigger trend where China's big tech companies are showing interests in O2O or "online to offline" commerce. Last year, Alibaba and Ant Financial has already announced that they were investing nearly $1 billion in similar service, Koubei.com, Alizila noted.
The O2O market is booming in China as more people in the country are embracing the digital economy and use smartphones to do their daily lives. A survey conducted by McKinsey revealed that most Chinese consumers, at 71 percent, were already using O2O services.
Following the investment deal, neither Ele.me nor Alibaba revealed further details on what stakes the tech giant received. However, a previous report said last December that Alibaba had agreed to invest $1.25 billion for 27.7 percent stake.
Alibaba and its payment business unit Ant Financial invested in their second online food delivery service company, Ele.me. Totaling in $1.25 billion, the food delivery startup is boosting its profile in the competitive O2O market of China, where tech companies are investing in such businesses more than ever.