
China’s Easyhome raises $2b from Alibaba, PE investors
Alibaba Group has joined a group of PE investors to acquire a 36% interest in Beijing Easyhome Furnishing, China’s second-largest home improvement supplies and furniture chain operator, in a deal worth RMB13 billion ($2 billion).
The internet company will invest RMB5.45 billion for a 15% stake, becoming the second-biggest shareholder in Easyhome. Beijing Harvest Capital will commit RMB1.45 billion, with the remainder coming from Taikang Group, Yunfeng Capital, Sequoia Capital, Boyu Capital, ChinaEquity Group, Noah Holdings, BHG Long Hills Capital Management, and JD Capital.
The investment underscores Alibaba’s ongoing efforts to develop its so-called new retail strategy – a business model that integrates physical presences and online activities as to create a better shopping experience for customers – across segments including fresh food chains, home appliances, and apparel, the company said in a statement.
Founded in 1999, Easyhome operates 223 home furnishing stores in 29 provinces, with annual sales of more than RMB60 billion. In addition to selling furniture and building materials, it provides home design and refurbishment services.
As part of the deal, Alibaba will support the digital transformation of Easyhome’s physical stores by applying is expertise in cloud and logistics platforms. Easyhome wants to become a fully integrated online and offline enterprise by 2022. By then, it aims to have more than 600 retail stores, with gross merchandise volume of over RMB100 billion.
Alibaba has been making sizable investments in offline retail sector since 2015, when it bought a 20% stake in Hony Capital-backed Suning Commerce for RMB28.3 billion. In November 2017, Alibaba acquired a 36.16% stake in Sun Art Retail Group, the largest hypermarket operator in China, for $2.9 billion. The e-commerce giant also led the $2.6 billion privatization of Hong Kong-listed Chinese department stores operator Intime Retail Group.
Alibaba launched supermarket chain Hema in 2015 as an example of its new retail strategy. Customers can order fresh food for home delivery through a mobile app, or shop and eat at Hema’s physical stores, which have their own kitchens. Payments are settled through the app, which is linked to Alibaba’s Alipay platform.
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