Sil­ver Lake to join $1.2b round in key Alibaba arm

China Daily (Hong Kong) - - BUSINESS - By BLOOMBERG

Alibaba Group Hold­ing Ltd’s on-de­mand ser­vices unit is close to se­cur­ing $1.2 bil­lion of fund­ing for ex­pan­sion af­ter get­ting back­ing from first­time in­vestors in­clud­ing Sil­ver Lake Man­age­ment and China’s sov­er­eign wealth fund, peo­ple fa­mil­iar with the mat­ter said.

The lat­est round for Koubei, which deals in lo­cal ser­vices such as food de­liv­ery, will sur­pass a $1 bil­lion tar­get with back­ing from China In­vest­ment Corp, ac­cord­ing to the peo­ple, who asked not to be named be­cause the mat­ter is pri­vate. The round also in­cludes Yun­feng Cap­i­tal, a fund backed by Alibaba co-founder Jack Ma, and val­ues the two-year-old startup at about $8 bil­lion, they said.

Sil­ver Lake, the largest tech­nol­ogy-fo­cused pri­vate eq­uity firm, was an early in­vestor in Alibaba but typ­i­cally es­chews early-stage back­ing for Chi­nese star­tups. On-de­mand lo­cal ser­vices have at­tracted ma­jor spend­ing in past years and have be­come a costly bat­tle­ground for Chi­nese in­ter­net com­pa­nies from Alibaba to Ten­cent Hold­ings Ltd, as more peo­ple turn to the web to or­der take-out, sched­ule beauty treat­ments and hire do­mes­tic helpers.

Bei­jing-based Pri­mav­era Cap­i­tal Group and CDH In­vest­ments are also in­vest- ing in Koubei’s round, the peo­ple said.

Fred Hu, chair­man of Pri­mav­era, con­firmed the com­pany is an in­vestor in Koubei without elab­o­rat­ing. Sil­ver Lake de­clined to com­ment while CIC, CDH and Yun­feng didn’t re­spond to re­quests for com­ment.

Baidu Inc is the other big player in a loosely de­fined “on­line-to-off­line” mar­ket that’s ex­pected to reach 7.28 tril­lion yuan ($1 tril­lion) by 2017. Chi­nese users of lo­ca­tion-based ser­vices could rise 29 per­cent to 400 mil­lion peo­ple next year, ac­cord­ing to Shang­hai-based in­ter­net con­sul­tant iRe­search.

The in­tense com­pe­ti­tion for on­line con­sump­tion re­quires bil­lions of dol­lars in mar­ket­ing, sub­si­dies and other in­cen­tives to en­cour­age spend­ing. It’s also height­en­ing ten­sions between the coun­try’s largest in­ter­net play­ers.

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