Koubei, Alibaba’s Local Commerce Platform, Raises a Massive $1.1 Billion in Funding

26 Jan

By Mudit Mohilay, The Tech Portal

Alibaba has been faring pretty well well of late. The company is doing a raring business and despite some setbacks like a flow of counterfeit goods to the platform, 2016 has been a pretty good year overall. Well, business has not been the only source of money for the Chinese conglomerate and funding has also brought in a fair share of money to affiliate companies. Along the same, Koubei has raised a massive $1.1 Billion in funds.

Rumors of the fund first surfaced back in October, and it was also stipulated that the fund could run into the tune of billions. Last year, it was reported that Koubei would raise a $1 Billion sum at a valuation of $8 Billion. The company has raised $1.1 Billion — however, the valuation is not certain.

Meanwhile, the funding is said to have been occurred sometime in January itself. The round was led by Silver Lake, CDH Investments, Yunfeng Capital and Primavera Capital and was the first time that external investors participated in backing Alibaba’s venture.

In case you are unaware of it, Koubei is a joint venture founded in 2015 by Alibaba and Ant Financial. The platform seeks to bring local retailers onto the web and help them leverage the web to reach ever more customers. The organizations together invested $480 million into Koubei at the time of creation.

Why is this much money necessary? Well, with the market as full of commerce platforms as it is at present, the one that offers the best deals, the best marketing etc. is going to win out in the end as other players drop out of the race — exhausted. Koubei could be deploying these funds to increase its consumer base by offering deals an discounts to customers.

Announcing the funds through its financial report, Alibaba said:

Koubei, our local services joint venture with Ant Financial, generated RMB73.1 billion (US$10.5 billion) in payment volume transacted through Alipay during the December quarter, representing a 52% increase over the prior quarter. In January 2017, Koubei completed a US$1.1 billion equity financing led by Silver Lake, CDH Investments, Yunfeng Capital and Primavera Capital. This transaction provides Koubei with a strong capital base to execute on its aggressive growth strategy. 

Alipay it should be remembered, is managed by Ant Financial, so the data is probably reliable. Meanwhile, the funds will allow Koubei to stay in the race in a highly competitive market.