Alibaba raises forecast, agrees to buy 33pc of Ant Financial
Alibaba Group Holding Ltd. raised its annual sales forecast and agreed to buy a 33% stake in its financial services affiliate.
Revenue in the 12 months ending March will rise 55% to 56%, the company said. That's up from a range of 49% to 53% previously. Alibaba will buy new shares in Ant Financial in exchange for certain intellectual property rights with the companies to terminate a current profitsharing arrangement.
The e-commerce giant's revenue growth has been underpinned by Chinese consumer strength and investments to link its business to traditional retailers. Billionaire founder Jack Ma's splurged $13 billion since 2015 in brick and mortar companies-shaking up supermarkets and department stores, equipping them with management systems, and investing billions into artificial intelligence and cloud computing.
"Reacceleration in overall e-commerce growth shows the early benefits of Alibaba's new retail strategy," Karen Chan, an analyst at Jefferies Group LLC wrote in her research report. Alibaba will "extend its last-mile reach to the 60% offline consumer population."
The company also posted third quarter results, with revenue and adjusted earnings topping estimates.
Shares of Alibaba climbed 2.3% in New York. The stock has gained 18.5% this year compared with a 4.4% gain for the NYSE Composite Index.
Ant Financial, known formally as Zhejiang Ant Small & Micro Financial Services Group Co., operates the Alipay payments system.
Meanwhile, Alibaba Group Holding Ltd led a $300 million investment into India's biggest online grocer Bigbasket, signalling that the region's segment is firing up.
Hari Menon, Bigbasket's co-founder and chief executive officer, said the investment values the company at $950 million-just $50 million under the $1 billion valuation that would have earned it tech unicorn status.
"We wanted a strategic investor and saw Alibaba as the best fit," Menon said in an interview.
He said existing investors Abraaj Group and Bessemer Venture Partners participated in the latest round.
India's retail market is worth over $900 billion and grocery shopping accounts for about $600 billion of that, Menon said. Bigbasket's rivals include India's leading online retailer Flipkart Online Services Pvt., as well as the SoftBank Group Corp.backed Grofers.
The company will deploy the funds into building farmer networks, warehouses and delivery infrastructure with a goal to penetrate deeper into the more than two dozen cities it currently operates in, Menon said.
The Bengaluru-based start- up, founded in December 2011 by Menon and four other entrepreneurs, sells everything from fresh leafy greens to kitchen mops, spice mixes and savoury Indian tea-time snacks.