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Alibaba to invest $692m into department-store operator Intime Retail before IPO

RBR Staff Writer Published 01 April 2014

Chinese e-commerce giant Alibaba Group, which is priming for an US initial public offering (IPO), has agreed to make a strategic investment of HK$5.37bn ($692m) into a local department-store operator Intime Retail, in a bid to extend its online strength into real-world shopping.

Alibaba will make the investment by subscribing to 220.54 million new shares of Intime Retail at a price of HK$7.53 ($0.9) per share, and by subscribing to HK$3.71bn ($478m) in convertible bonds.

Following the completion of the deal, Alibaba will hold an equity stake of about 9.9% in Intime Retail. The deal is the first foray into a physical store format for Alibaba Group.

The deal will see the two companies forming a joint-venture to develop an online-to-offline (O2O) business in China relating to shopping malls, department stores and supermarkets, as part of its plans to enhance shopping experience.

Intime Retail noted that it will also use the proceeds from the deal for the expansion of its retail business network by opening new stores, possible acquisition of high quality assets and/or retail businesses in order to complement the group's retail business, repayment or prepayment of existing debt, and for general working capital.

Alibaba has been on a buying spree to strengthen its offerings ahead of its proposed IPO in the US that could value the company at up to $200bn.

Alibaba is seeking a US listing after talks over listing itself on the Hong Kong stock exchange broke down in September.
In September lat year, investment banks have valued Alibaba at as much as $120bn.