Softbank leads $3bn funding of Alibaba’s food delivery service

SOFTBANK has led a $3bn (£2.3bn) funding round into Ele.me, the food delivery division of Chinese technology company Alibaba.

Alibaba will merge the Ele.me delivery unit with Koubei, which focuses on connecting restaurants to the internet. China’s food delivery market is expected to be worth up to 1.3 trillion yuan (£150bn) by 2021, according to market research company Mintel.

“As a result of this reorganisation, subject to closing conditions, we will consolidate Koubei, which would result in a material one-off revaluation gain when the transaction closes,” Alibaba said.

Alibaba also yesterday reported its most recent quarterly earnings. The business reported lower net earnings than analysts expected, as well as flat profits. However, the announcement that it had raised capital for its food delivery business helped to send its share price up 3.7pc in pre-market trading in New York.

Softbank has previously backed tech start-ups including Uber and Wework.