E-commerce firm Alibaba and its financial services affiliate Ant Financial are set to lead a $1bn funding round for China-based online food ordering platform Ele.me, Bloomberg reported today.
The round will value Ele.me at between $5.5bn and $6bn, according to people familiar with the matter, and would take the company’s overall venture funding to about $3.35bn.
Ele.me runs an online service that enables users to order food from a variety of local restaurants that can then be delivered to their homes. It had a 35% share of the market in China as of last month, behind only Meituan Waimai according to a report in the South China Morning Post.
Ele.me founder and chief executive Zhang Xuhao told SCMP the company intends to focus on China until online delivery services, which have been tried by about 5% of the country’s population, reach 20% penetration, at which point it will begin exploring overseas expansion.
The investment is intended to give Alibaba a sizeable stake in China’s online food delivery industry, in which rival Tencent is backing local services provider Meituan Dianping, the owner of Meituan Waimai, which was valued at $18bn as of July 2016, as part of a drive to create an ecosystem around its WeChat Pay platform.
Alibaba and Ant Financial had already provided $1.25bn of funding to Ele.me in April 2016 at a $4.5bn valuation, giving them a joint stake reportedly sized at 27.7%.
Tencent is itself an investor in Ele.me, having participated in a $630m series F round in 2015, and had attempted to leverage a merger with group buying platform Meituan prior to the latter’s merger with local reviews platform Dianping, according to Bloomberg.
The series F included e-commerce company JD.com and retail conglomerate Hualian among others, and followed a $350m round a few months earlier featuring Tencent, JD.com, Dianping, Sequoia Capital and Citic Private Equity.