Alibaba invests $294m in Chinese digital mapping firm

Alibaba - the country's largest e-commerce player with interests spanning B2B, B2C, C2C transactions and online payment, which is minority-owned by several PE investors - will become the largest shareholder in AutoNavi. In addition to investing in the company, several Alibaba subsidiaries - including Taobao Marketplace and Tmall - will form a strategic alliance with AutoNavi to develop location-based e-commerce opportunities.

The transaction, which is expected to close in the near future, will also see Joseph Tsai, executive vice chairman of Alibaba, and Eddie Wu, president of the company's mobile products division, join the AutoNavi board.

"This new alliance reflects our vision for the future of the mobile Internet," said Jack Ma, executive chairman of Alibaba. "We're pleased to work with partners such as AutoNavi to develop terrific applications and services that bring more convenience, fun, and joy to our users."

Congwu Cheng, CEO of AutoNavi, added that the alliance would allow the company to establish a large "points of interest" (POI) platform based on the consumer preferences of its users. This will in turn help the company to monetize its wealth of data, providing a one-stop service application that integrates merchant information with POIs search, data mining, payment and other e-commerce activities.

AutoNavi claims to be the leading provider of digital map content and location-based solutions in China. Its services are underpinned by a nationwide digital map database that covers approximately 3.6 million kilometers of roadway and over 20 million POIs. The company's free mobile app has 116 million users and it provides mapping data to customers including iOS, Google Maps and Baidu.

According to AVCJ Research, AutoNavi received $40 million in VC funding in 2006 from a group of investors. The consortium included Walden International, Sequoia Capital, Legend Capital, ChinaValue Capital Advisors, Harbinger Venture Management, Indus Capital Advisors, Inventec Appliances, KPCB and MTI Capital. The company went public in 2010, raising $107 million.

As of April 2013, none of these investors was among AutoNavi's principal shareholders. Company management between them control 33.9%, with CEO Jun Hou personally holding 16.9%.

Net income for the first quarter of 2013 came to $5.8 million, compared to $9 million in the final three months of 2012. Revenues dropped substantially to $34.3 million from $43.6 million in the previous quarter due to a decline in the automotive navigation business. AutoNavi said the results reflected a focus on its mobile business.

Alibaba and its fellow Chinese internet giants Baidu, Tencent and Sina have developed an appetite for inorganic expansion in recent years.

Alibaba, which is expected to pursue a public listing this year, has also acquired an 18% stake in Weibo, the Twitter-like micro-blogging platform owned by Sina, for $586 million. Last week, Baidu agreed to buy VC-backed PPS' online video business for $370 million.

 

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• Topics
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