DHAKA -- Alibaba Group Holding has reached a deal under which it will buy a leading Bangladeshi online meal delivery service in one of its first international forays in the fast-growing sector.
Alibaba took full control of Ele.me, China's second-largest food delivery service, in 2018.
The platform, which has expanded to encompass services including manicures and housecleaning, generated 24.29 billion yuan ($3.75 billion) in revenue for Alibaba in the nine months to Dec. 31. Ele.me and other Alibaba "local services" units counted 290 million customers and 850,000 drivers, according to a company presentation last September.
HungryNaki, Alibaba's new Bangladeshi affiliate, is much smaller. Founded in 2013, it claims to have more than 500,000 regular customers ordering from 4,000 restaurants in five cities. The company has 500 drivers and 100 staff.
"This is the first acquisition of a Bangladeshi startup," Chief Executive A.D. Ahmad told Nikkei Asia. "It is a matter of pride. We have concluded the deal and it may take a month to finalize the acquisition process."
Under the deal announced Thursday, Alibaba is acquiring 100% of HungryNaki from its local owners via Daraz Group, the Pakistan-based e-commerce platform it acquired in 2018. Daraz plans to extend HungryNaki's network to around 100 cities, with investments in infrastructure, technology and human resources, officials said. No price has been disclosed.
"We believe instead of building our own food delivery business from the ground up, acquiring HungryNaki is ideal," Daraz spokesperson Shayantani Twisha told Nikkei.
Daraz has been Alibaba's main operating vehicle in Bangladesh, Pakistan, Myanmar, Sri Lanka and Nepal. Alibaba has invested more heavily in India, but over the past year has seen some of its apps banned and further investments restrained due to the border conflict between China and India.
Ant Group, Alibaba's financial services subsidiary, bought a 20% stake in bKash, a Bangladeshi peer, in 2018. Ant has also invested in Indian food delivery app Zomato.
Bangladesh's food delivery market has attracted international interest before. Berlin-based Foodpanda launched in the country soon after HungryNaki. More recently, Singapore-based Golden Gate Ventures led a $15 million round for rival delivery service Shohoz.
With as many as nine delivery apps competing over around 100,000 orders a day, many of the services have been bleeding cash. Uber Eats closed its local operations last year.
A HungryNaki investor told Nikkei he would be taking a large loss on the capital he had put into the company with the sale to Alibaba.
"This is not a success case for local entrepreneurs, rather a failure case for startups," he said.
Maliha Quadir, founder and managing director of Shohoz, told Nikkei she remains bullish about food delivery's prospects in the country, given rising incomes and employment rates for women, but worries about the entry of foreign operators.
"Big players will make it difficult for local startups," she said. "Bangladesh's market is small."
Others, though, see Alibaba's move as a vote of confidence in the country's private sector.
"This will be a positive move," said Muhammad Abdul Wahed Tomal, general secretary of the e-Commerce Association of Bangladesh. "HungryNaki will get bigger."