Alibaba Group Holding Ltd. recently announced an impending investment of $692 million in a Chinese department store operator. The Chinese e-commerce empire is hoping to expand its reach to customers who prefer to shop in-store.
The investment in Intime Retail Co. Ltd. will come in two parts. Alibaba will purchase $214 million in shares as well as $478 million of convertible bonds to acquire a 26.1% stake in the department store. The company’s announcement comes after a $2.7 billion investment in efforts to expand its media, mapping and chat services across the globe, and ahead of an upcoming IPO which will take place in the U.S. later this year.
As part of the new arrangement, Intime and Alibaba are creating a joint venture to develop their O2O, or online-to-offline, business in department stores, supermarkets and shopping malls throughout China. Nearly 80% of this venture will be managed by Alibaba, and Intime will control the rest.
Reuters.com reported that shares in Intime have increased by around 17% since the market opened on Monday. This follows a “trend of Hong Kong-listed companies whose shares gained sharply after receiving investments from Alibaba.”
Reuters added that “Appliance maker Haier Electronics Group Ltd. soared 20% in December after Alibaba unveiled plans to invest $361 million,” while “ChinaVision Media Group more than tripled earlier in March after Alibaba agreed to buy a controlling stake for $804 million to gain access to TV and movie content.”