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Business

Salim Group buying Indonesia e-commerce platform as battle brews

XL Axiata's exit from sector gives conglomerate a new tool to fend off Alibaba

Salim Group, led by Anthoni Salim, has been beefing up its e-commerce operations. (Photo by Wataru Suzuki)

JAKARTA -- Indonesian conglomerate Salim Group is buying the company behind local e-commerce platform elevenia, as it gears up to take on powerful international players like Alibaba Group Holding.

Two group affiliates are acquiring XL Planet -- a 50-50 joint venture between XL Axiata, the Indonesian unit of Malaysian telecommunications company Axiata Group, and South Korea's SK Planet. XL Axiata announced the deal on Thursday without disclosing the purchase price.

XL Planet launched elevenia in March 2014, making it an early player in the field. But lately the platform has struggled to compete with well-funded rivals, with investors pouring money into the country's burgeoning online shopping market.

Last week, local e-commerce operator Tokopedia announced it will receive a $1.1 billion infusion from a group of investors led by Alibaba. The Chinese e-commerce giant also owns Lazada, an e-commerce platform with operations across Southeast Asia.

Salim, which has irons in fires ranging from food and cars to retail and commodities, has been bolstering its e-commerce business for the past few years. It partnered with South Korean conglomerate Lotte to develop an e-commerce platform that is expected to debut in the next two months.

It is unclear what role elevenia will play in Salim's portfolio, but one source familiar with the group's strategy said the platform's data archive will be useful.

For XL Axiata and SK Planet, the deal marks their exit from Indonesia's e-commerce sector.

The "strategic choice to release ownership of elevenia will make XL Axiata increasingly focus on [its] main strengths" as a data service provider, the company said. "In addition, this decision will reduce the impact of losses arising from elevenia and allow XL to allocate capital to generate profits for its shareholders and provide better services to its customers."

XL Axiata expects the transaction to close by the end of the year.

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