Alibaba, the Chinese eCommerce giant, is having success with its newly-created on-demand online services unit — it raised $4 billion in funding, giving it a valuation of as high as $30 billion.
Reuters, citing people with knowledge of the situation, reported the unit — which is a combination of Ele.me, the food delivery service, and Koubei, its online restaurant guide business — reported more than $3 billion of the new capital comes from Alibaba and Softbank’s Vision Fund. Primavera Capital and Ant Financial, the payment affiliate of Alibaba, also took part in the latest fundraising, noted Reuters. The round of funding is expected to close at the end of November. Back in August Alibaba had said it got commitments from investors for more than $3 billion, including Softbank and itself.
Reuters reported the new funding is expected to go to fight rival Meituan Dianping, which is backed by Tencent, to control the online-to-offline market in China. In that version of retail, apps and smartphones work at physical stores providing consumers with access to food delivery and other on-demand services. Alibaba rival Meituan Dianping raised $4.2 billion in what was the largest Internet initial public offering in the past four years, noted the report. Meituan has around 357 million active users compared to 167 million at Ele.me.
Earlier in November Alibaba posted fiscal second-quarter results that topped expectations on the bottom but missed on the top. For the quarter the company’s earnings per share stood at a reported 9.60 yuan, higher than the 7.4 yuan expected — and growth in the top line was 54 percent, to 85.1 billion yuan, which was about a percent below consensus. The top-line growth, a bit of deceleration from rates that topped 60 percent earlier this year, nonetheless was buoyed by strong demand for commerce done online as the company continued to move beyond its traditional reliance on online shopping and into new businesses, including delivery of food.