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BEIJING, February 23 (TMTPOST) — Chinese e-commerce giant Alibaba Group had hoped to raise at least US$1 billion for Lazada, its southeast Asian e-commerce subsidiary, but failed due to a stalement over the company’s valuation, Bloomberg reported on Wednesday, citing sources familiar with the matter.

Aliabab has canceled negotiations with potential investors, the report said.

Alibaba hoped to raise funds for Lazada as a precursor to a spinoff of the Southeast Asian online retail company and a potential IPO, Bloomberg reported, quoting sources. However, Alibaba had halted talks with potential investors due to failure to get an ideal valuation.

Sources said that Alibaba decided to halt the fundraising process because it is not in urgent need of cash and that the market is volatile as the valuations of tech companies continue to shrink.

Alibaba still wants to spin off Lazada as a separate company given the increasing competition from other e-commerce platforms in Southeast Asia such as Shopee and Goto.

As the e-commerce market in China continues to mature, Alibaba is considering focusing more resources in overseas markets to boost growth. Alibaba has Lazada in Southeast Asia, Trendyol in Turkey and Daraz in South Asia.

Alibaba has set up a long-term goal for Lazada – to increase its GMV (gross merchandise value) by four times to US$100 billion. Alibaba wants Lazada to provide services for 300 million users.

Alibaba has declined to comment on the news report.

Established in 2012, Lazada is an international e-commerce company based in Singapore and primarily serves the Southeast Asian market. Alibaba acquired a majority stake in Lazada in April 2016 to pursue its international expansion strategy. Lazada became the largest e-commerce operator in Southeast Asia in terms of average monthly web visits. In September 2019, Lazada said it was the top e-commerce platform in Southeast Asia with more than 50 million monthly active buyers.

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