Alibaba’s $3 Billion Five-Year Loan: More Money for Investments Abroad

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Reuters:

China’s Alibaba Group Holding Ltd (BABA.N) on Thursday said it has signed a deal for a $3 billion five-year loan, which will help the e-commerce giant as it snaps up stakes in companies within China and overseas. (…)

Alibaba added that the loan would be used for “general corporate purposes”, without expanding on what this meant. A China-based Alibaba spokesman declined to comment further.

The U.S.-listed firm has been on something of a spending spree of late: its capital expenditure in the last three months of 2015 was 4.9 billion yuan ($752 million), more than triple the level in the same period in 2014.

Alibaba’s expansion until now has been mainly about investing in other companies. Last year I wrote:

In August of this year Alibaba invested in India’s Snapdeal which is directly competing with Amazon in India. It is likely for Alibaba to give more money to Snapdeal and others who are competing with Amazon in local markets. The enemy of my enemy gets my money, seems to be an investment thesis for Alibaba. Alibaba invested in Amazon challenger Jet.com. Alibaba has also invested in Chinese Uber rival Didi Kuaidi.

In May of this year Alibaba took part in an investment round in Snapchat. In September Alibaba invested in Indian payments startup Paytm.

There is again an incomplete overview of investment activities by Alibaba at Crunchbase.

Alibaba, by virtue of its size, is turning out to become a kingmaker in some parts. India’s #1 smartphone manufacturer, Micromax, for example is struggling after Alibaba backed out of an $1.2B investment deal.

Alibaba’s international investment activities are, still, great news especially for e-commerce companies as venture capital is still comparatively[^1] rare for online retail.

The most recent high-profile investment rounds Alibaba took part of were a $200 million round for India’s Snapdeal and a $1 billion Series F round for ride-sharing company lyft.

More on this topic:

[^1] Compared with other VC activity in other Internet sectors and compared with the market potential of online retail.

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  1. […] Alibaba’s $3 Billion Five-Year Loan: More Money for Investments Abroad […]

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