KARACHI: Chinese ecommerce giant Alibaba acquired Pakistan-based leading online retailer Daraz Group for an estimated $150 to $200 million a couple of months after it announced a multibillion rupees investment in acquisition of 45 percent stake in a local financial service, industry officials said on Tuesday.
The officials said this would be a second investment in online space in a row, which would develop the local ecommerce market and attract other foreign investors in the country, which is witnessing growth in ecommerce.
Berlin-based tech incubator Rocket Internet said Alibaba Group acquired the entire share capital of South Asian ecommerce platform Daraz Group for an undisclosed amount. Daraz also operates online marketplaces in Bangladesh, Myanmar, Sri Lanka and Nepal. It was founded in 2012 in Pakistan, and has since grown into the most popular online shopping destination in the country.
Spokesperson of Daraz Group Saman Javed said the group head office would remain in Pakistan. Alibaba would make investment according to its own standards and technology, Javed added.
Bjarke Mikkelsen, co-chief executive officer of Daraz said the group has found its natural home in the Alibaba family with this transaction “and we are proud to carry our part of the mission to make it easy to do business anywhere”.
“With hard work and dedication we have started the e-commerce journey in our markets, but we have still only scratched the surface of the potential,” Mikkelsen added.
In March, Ant Financial Services Group, an affiliate of Chinese e-commerce giant Alibaba, agreed to acquire 45 percent stake worth around Rs20 billion in a subsidiary of Norwegian Telenor to broaden access to financial services through digital payment solutions in Pakistan.
Ecommerce players are also seeing the entry of a global leading online and mobile payment platform as a good omen for the market where 90 percent of online orders of Rs9.8 billion were still fulfilled using cash-on-delivery in the past fiscal year.
Umair Mohsin, a program manager at the state-funded National Incubation Centre said the entry of Chinese group is a good omen for Pakistan’s technology ecosystem.
“They are expected to make investment in building the online shopping market,” Mohsin whose incubation centre initially allocated six million dollars to provide seed funding to startups.
Daniel Zhang, chief executive officer of Alibaba Group, said the company is excited for Daraz to become a part of the Alibaba ecosystem.
“Together with Daraz, we can now empower entrepreneurs to better serve consumers in the region through our technology and expertise,” Zhang said.
“In Daraz, we found a great team that espouses our values and believes that a technology-enabled commerce ecosystem will play a critical role in driving the long term economic development in South Asia.”
The five South Asian markets in which Daraz is operating have a combined population of over 460 million, 60 percent of which are under the age of 35.
Daraz will continue to operate under the same brand following the transaction.
Oliver Samwer, chief executive officer of Rocket Internet said the sale of Daraz to Alibaba is another testament to Rocket Internet´s ability to successfully scale and exit market-leading companies.
“Leading technology and a strong logistics network have helped creating one of the fastest growing companies in the region,” Samwer said. “The acquisition by Alibaba is a tremendous success for the entire team working at Daraz.”