Alibaba, Ant Financial to jointly invest $1.25 billion in Ele.me

(THE WALL STREET JOURNAL) Chinese e-commerce giant Alibaba Group Holding Ltd., together with its financial affiliate, is placing a $1.25 billion bet on Chinese food-delivery app Ele.me, further fueling the battle to deliver offline services to Chinese consumers through mobile phones.

The move to back Ele.me comes after Alibabareached a deal earlier this yearto sell its stake in Meituan-Dianping, China’s largest online provider of movie ticketing, restaurant bookings and other on-demand services. Ele.me competes with Meituan-Dianping and Chinese search company Baidu Inc.’s Nuomi platform.

Alibaba will invest $900 million in Shanghai-based Ele.me, and its financial affiliate Ant Financial Services Group will chip in a further $350 million, according to an Ant Financial spokeswoman. Ele.me’s Chinese name means, “Are you hungry?”

Alibaba also signed a cooperation agreement with Ele.me, under which its own online food-services platform, Koubei, which means “word-of-mouth reputation” in Chinese, will cooperate with Ele.me. Alibaba and Ant Financial Services Group pledged in June last year to each invest three billion yuan ($464.2 million) in Koubei.

Ele.me couldn’t immediately be reached for comment.

China’s Internet companies have sought to expand their shares of the fiercely competitive market for smartphone applications connecting users with brick-and-mortar services such as taxi rides, food deliveries, restaurant bookings and movie ticketing.

In January, Meituan-Dianping raised $3.3 billion in the largest private fundraising round globally for a venture-capital-backed startup. Valued at more than $18 billion by the fundraising, Meituan-Dianping,formed by the mergerof two rival startups last year,raised the fresh capitalfrom investors including Alibaba’s chief rival, Tencent Holdings Ltd.

Many startups have burned out in the battle to attract users with heavy discounts and subsidies, but Alibaba and Tencent say they have deep pockets and supporting services such as maps, data and payments platforms to give them an edge over other competitors.

Alibaba’s executives have said the company’s dominance in e-commerce can translate to success in the offline, local-services market, pointing to the heavy traffic of hundreds of millions of users of its shopping app, Taobao, and affiliated payments business, Alipay. The company also has a mapping arm and other assets that can support such a business, they have said.