Saudi Arabia’s Kingdom Holdings leads $400m round for 360Buy

Kingdom, which was advised by Qatar's QInvest, contributed $125 million to the round. The other investors haven't been disclosed.

According to AVCJ Research, this is 360Buy's sixth round of institutional funding and it takes the total raised past $1.8 billion. The investment comes barely three months after the company received $400 million from Ontario Teachers' Pension Plan and Tiger Global and nearly two years after DST Advisors and led a consortium that put in $1 billion.

"This deal is also in line with Kingdom Holding's private equity investment strategy through selecting high growth companies potentially seeking to be listed in one of the international capital markets within three years," said Eng. Ahmed Halawani, the group's executive director for private equity and international investments, in a statement. "The deal also reflects international companies' confidence in Kingdom Holding and the strategic role it plays in adding real value to their shareholders base."

Alwaleed, who is said to be worth $29 billion and owns 95% of Kingdom, added that the investment "solidifies the strategic relationship between Saudi Arabia and China."

Kingdom and Alwaleed previously invested $300 million in social networking site Twitter, but this is the group's first known tech sector deal in China. However, Kingdom claims exposure to the country through its investment in Disneyland Hong Kong and its holdings in the likes of Citibank and hotel chains Four Seasons and Fairmont Raffles.

360Buy is China's largest online retailer after Alibaba's TMall and is described as the country's leading B2C direct sales e-commerce company. Established in 2004, it has achieved compound annual growth of 150% in terms of gross merchandise volume in recent years and currently offers more than seven million products.

As of year-end 2012, 360Buy had 80 million registered users - 35 million classified as active - and a nationwide network of six fulfillment centers, 65 warehouses and nearly 900 delivery stations. Much of the capital raised in the last year has been earmarked for logistics.

The reason 360Buy requires so much capital is that it is essentially buying market share. The company has apparently yet to reach profitability and sells many of its products at close to zero or even negative margins in order to secure customers and build brand value.

360Buy is expected to go public as soon as this year and needs scale to convince investors that it will still be a major player as China's e-commerce market matures. While Analysys International expects online retail transactions to rise fivefold to $100 billion over the next two years, customers have yet to display widespread brand loyalty and tend to switch between retail platforms based on price alone.

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• Topics
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