Alibaba, Ant Financial Bet $1.25 Billion On Food Delivery Startup Ele.me

After much speculation it’s been confirmed that Alibaba and their financial affiliate, Ant Financial, will together invest $1.25 billion USD in Chinese on-demand food delivery app Ele.me.

Alibaba will pitch in $900 million USD while Ant Financial will add an extra $350 million to the round. The deal also includes a new partnership between Alibaba’s own on demand services platform, Koubei, and Ele.me.

The duo now represents Alibaba’s biggest bet in the on-demand market. Alongside the $1.25 billion injection into Ele.me, the Chinese internet giant also pledged 3 billion yuan to growing out Koubei. Ant Financial also committed the same amount to the project.

Alibaba have not revealed further details on the deal, including how much their stake in the food delivery service would be. Last year Chinese financial magazine Caixin reported that the deal being discussed was for a 27.7% stake.

The news comes just months after Alibaba sealed a deal to sell their stake in competing on-demand service Meituan-Dianping, which also happens to be backed by Tencent. The other large competitor in the market is Nuomi, the on-demand platform that search giant Baidu has pledged $3 billion USD to improve.

The Ali-Ele.me partnership ties up a lot of loose ends in the highly-contested on demand market. During the Meituan-Dianping merger last year, and their subsequent $3.3 billion USD funding round (which rocketed the company’s valuation to over $18 billion USD), there was much speculation over which camp Alibaba would choose and whether they would maintain their stake in Meituan-Dianping.

It’s now clear that China’s deep pocketed tech giants intend on spending heavily through another subsidy-fueled war of attrition in the on-demand space.