Alibaba Invests Massively In Startup Meituan Dianping To Gain Control

Alibaba would control Meituan Dianping, food delivery startup, after closure of its  fundraising round at $1.25bn.

The Chinese food delivery startup, Ele.me, is planning to end a financing round worth at least $1.25bn by the earliest in February in a deal led by rival Alibaba, according to people directly aware of the issue.

Alibaba would be the controlling shareholder of Ele.me after the investment, which has valued the delivery startup at around $4.5bn, people told, asking to remain anonymous because of the information privacy. The deal could be announced by the Lunar New Year Holiday starting February 8, 2016.

Ele.me was negotiating merger with the group-purchasing platform Meituan.com, but failed. Baidu, Tencent and Alibaba are battling to lead the industry of local service providers primed for expansions as more people turn to the internet or their smartphones for scheduling beauty treatments, ordering food or hiring the services of domestic helpers. Service users can increase by 29% to 400 million by 2017, with sales reaching $1.1 trillion (7.28 trillion Yuan).

Data compiled by Bloomberg revealed that Chinese companies have succeeded in involving themselves in investments and acquisitions worth $91.6bn in the internet sector for the past one year.

Tencent fell by 1.7% in Chinese special administrative region, Hong Kong, to HK$133.10, its least price in a time span of almost 4 months. The financing for Ele.me has indicated due to the market turmoil and sluggish economy, venture-capital flow in the most populated country is resilient. British consultancy Preqin Limited has revealed that Meituan Dianping, which was established by a merger in 2015, just gobbled a $3.3bn worth round that was the biggest single investment in a company backed by venture capitalists.

Caixin earlier reported that Ele.me was discussing with the online trading giant for raising funds. Venture capitalists invested $37bn into the second largest economy in 2015, though in the recent times concerns grew that too many new emerging organizations have received funds in certain industries, which played a role in leading to money-losing wars fought with subsidies and promotions, and finally contributed to a number of mergers.

Alibaba and its financial subsidiary, Zhejiang Ant Small & Micro Financial Services, established a joint project known as Koubei, with both of them deciding to make an investment of 3bn Yuan to extend into neighborhood facilities. The country’s largest search engine operator ‘Baidu’ stated in 2015 it will make an investment of $3.2bn over three years in its owned local service provider, named Nuomi.

In other news, Alibaba’s Chairman, Jack Ma, said markets should not worry about the slowdown of China’s economy. He seems not only confident but suggests others to remain optimistic about the future. The country has significant contributions in international trade due to huge economy and productive capacities. This might be its advantage to rise from this slowdown.