Alibaba Group Holding Ltd. is making its largest overseas investment with a $1 billion deal for control of Lazada Group SA, taking the Chinese e-commerce giant to Southeast Asia and closer to a goal of shedding its home-market reliance.

China’s largest online emporium will pay $500 million for new shares in the closely held company and purchase an equal amount from existing investors, Alibaba said in a statement. Investors selling include Germany’s Rocket Internet SE, British supermarket chain Tesco Plc and Investment AB Kinnevik.

The Chinese company is buying its way into a region on the cusp of an online shopping boom, as fast-growing mobile and Internet usage propels consumer spending. Billionaire Alibaba Chairman Jack Ma has set a goal of getting at least half the company’s revenue from overseas, with the Lazada deal adding sales of clothing and electronics in six Southeast Asian markets.

lazada

While Alibaba has come to dominate e-commerce in its home market, it remains dependent on China for the vast majority of its business. The deal seems to represent a departure for Alibaba, which has mainly chosen to grow organically on its home turf, said Saemin Ahn, managing partner at Rakuten Ventures, which manages a $285 million fund and invests in the U.S. and Asia.

“It has huge cash sitting on its balance sheet so it can do this kind of investment. It’s also seeking future growth drivers,” said Marie Sun, an analyst at Morningstar Investment Service. “It needs to find some other place for future growth.”

Alibaba, which got more than 86 percent of its revenue from China in the December quarter, has made previous attempts to expand overseas through direct investments.

It bought San Mateo, California-based 11 Main Inc., only to sell the niche e-commerce site after a few years to rival online marketplace OpenSky when it failed to generate the synergy it was looking for. In exchange, Alibaba said at the time it would hold a “significant” stake in the combined entity.

Back home, Alibaba is pushing its own AliExpress site to buyers in emerging markets such as Russia and Brazil. Fueled by Russian shoppers looking for better deals online, AliExpress, which ships goods directly from Chinese sellers to foreign markets, became the biggest shopping site in the country in 2014, according to researcher TNS.

“With the investment in Lazada, Alibaba gains access to a platform with a large and growing consumer base outside China, a proven management team and a solid foundation,” Alibaba President Michael Evans said in Tuesday’s statement.

As seen on Bloomberg