Alibaba Reportedly Considers Buying Rocket Internet's Daraz

Online retail giant Alibaba Group Holding Ltd. on Tuesday was reportedly mulling over acquiring Pakistan’s biggest e-commerce shop Daraz, as the company aims to broaden its reach in the lucrative market of South Asia.

A source familiar with the matter said Alibaba and venture capital firm Rocket Internet SE, Daraz’ parent, were discussing a price for the retail unit. The deliberations are at an early state and no decisions have been made yet.

Neither Alibaba nor Daraz commented on the recent development.

If a deal is reached, this will be one of the largest acquisitions to come out of Pakistan, easing the Chinese group’s entry in the country’s e-commerce market, which is currently dominated by Rocket and Daraz.  

The report came after Alibaba affiliate Ant Financial Services Group announced last week that it will be buying a 45 percent stake for $184.5 million in Telenor Microfinance Bank Ltd., a mobile platform in Pakistan and subsidiary of telecom company Telenor Group.

The move is intended to help further bolster the country’s mobile payment and digital financial services.   

The retailer is also preparing to contend in Singapore, where its American counterpart Amazon.com Inc. has started operations, and internet platform Sea Ltd.’s online retail unit Shopee Ltd. is expanding to gain customers.   

Alibaba’s interest in Pakistan grew after Beijing funded about $60 billion in infrastructure projects across the country, as part of Chinese President Xi Jinping’s Belt and Road trade plan.

Following the report, shares of Alibaba were up by 1.4 percent to $197.34.     

Pakistan’s Growing E-commerce Market

Adam Dawood, head of an online retail store in Pakistan, stated that the country’s e-commerce sector is showing impressive growth, and brands are investing heavily in e-commerce platforms.

Dawood estimated that Pakistan’s e-commerce segment will cross over $1 billion mark in sales during the running fiscal year, two years sooner than earlier forecasts of the State Bank of Pakistan.   

Pakistan’s budding youth has transformed the country into the world’s fastest growing retail market, where stores and e-commerce are rising together, resisting the trend in many developing countries.

Survey by a market research group showed that its market is expected to expand by 8.2 percent a year through 2016-2021 as disposable profits increases.

Daraz said in February that Pakistan has 30 million active internet users, and brands are amplifying their focus to e-commerce to attract more customers.

Moreover, a news platform said the country’s information technology (IT) industry is already booming, surpassing record sales in IT exports in the previous fiscal year.

Having won a number of international awards and recognitions at global forums, the country’s IT sector has become the world’s fastest growing IT business, with exports rising 40 percent year on year to $5 billion in the recent fiscal year, compared to last year’s $3.3 billion.

HQBroker is here to give you a daily news roundup about the forex, commodities, technologies, automobiles, and economies. You can open an account now and make yourself updated with essential news in the market. Share your thoughts and experiences with us by commenting your HQBroker reviews.