SHANGHAI — Chinese e-commerce giant Alibaba Group Holding Ltd. has invested $1.22 billion in Youku Tudou Inc., China’s largest Internet television company.
Youku Tudou announced the investment late Monday.
This story first appeared in the April 29, 2014 issue of WWD. Subscribe Today.
Alibaba’s investment in Youku Tudou comes ahead of the e-commerce company’s upcoming initial public offering, which analysts project could be one of the largest in history. The IPO is projected to come within the next few days in the U.S.
Yunfeng Capital, a Chinese private equity firm, is also joining Alibaba in the billion-dollar purchase of class A ordinary shares from Youku Tudou.
Alibaba and Yunfeng will indirectly hold approximately 16.5 percent and 2 percent respectively of the shares, according to a statement issued by Youku Tudou.
In recent months, Alibaba has engaged in a widespread investment spree that has extended into the U.S. market. The company has announced the establishment of an e-commerce Web site in America via two of its subsidiaries.
In March, Alibaba agreed to invest $692 million in Chinese department store company Intime Retail to create “online-to-offline” retail opportunities. Also in March, Alibaba announced the purchase of a 60 percent stake in Chinese television and film production firm ChinaVision Media Group Ltd. for $804 million.
A rationale for the investment in Youku Tudou was not provided. A recent study from the Boston Consulting Group on China’s e-commerce industry noted that Youku Tudou is one of the top-five Web sites where Chinese Internet users spend a disproportionate amount of time. Many brands have turned to Youku Tudou as an advertising platform as opposed to more traditional media channels.
Alibaba executive chairman Jack Ma said in a statement that the investment would support Youku Tudou’s “innovation in this key emerging space as well as accelerate our digital entertainment and video content strategy. This is an important strategic initiative that will further extend the Alibaba ecosystem and bring new products and services to Alibaba’s customers.”