Jack Ma is Alibaba's chief executive. (Photo : Getty Images)
Citing people familiar with the matter, Bloomberg News has reported that Koubei, an affiliate of Alibaba Group Holding Ltd., eyes raising funds worth $1 billion to up its valuation to $8 billion.
The said move aims to set the firm at par with other Web giants and aid it in its market expansion endeavors, location-wise and user statistics-wise.
Alibaba as well as Zhejiang Ant Small and Micro Financial Services Group Co., another affiliate, invested in Koubei in June last year, cashing in three billion yuan for a 50-percent stake.
Asked about the news, both parties declined to comment.
In August, Koubei garnered a payment volume worth $5 billion through Alipay. The figure, which covers the June quarter, is 48 percent higher than the previous quarter.
After selling stakes in the Tencent-backed Meituan Dianping, Alibaba has been pouring its attention into its own local services. Chairman Jack Ma has earlier emphasized the importance of securing markets other than e-commerce, particularly the "online to offline" or O2O market.
The leading e-commerce firm is currently making various investments in O2O as this sector is predicted to hit $1 trillion by next year. China sees a continuous increase in people using mobile apps to purchase services and goods.
In line with this, Alibaba has teamed up with Ant Financial to put $1.25 billion into Ele.me. The website is the country's second-largest online restaurant and takeout delivery portal.
Distinguishing the difference between Koubei and Ele.me, Alibaba Vice Chairman Joseph Tsai shared: "Koubei focuses on the customers when the customers go to the restaurant, so they obtain information online mostly through a mobile device and then they may get coupons, discount coupons and whatever and they go to the restaurant and they pay with Alipay, all in a closed loop transaction. The Ele.me business is a food takeout business that requires last mile delivery, that's why we separated the two."
Chinese companies have turned their attention to local services as "people turn to the web to order take-out food, beauty treatments and domestic helpers," the article said.
Shanghai-based Internet consultant IResearch noted that by 2017, Chinese users who utilize location-based services could increase by at least 29 percent to 400 million individuals.
