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Alibaba's Ele.me set to receive $3 Billion from SoftBank, comments RWM Holdings.

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Alibaba's Ele.me set to receive $3 Billion from SoftBank, comments RWM Holdings.

PR Newswire

TOKYO, Aug. 8, 2018 /PRNewswire/ - RWM Holdings has commented that the market for on-demand services is significantly growing in China as people increasingly turn to their smartphones to order food. That must have been inside Masayoishi Son's mind because he recently decided to make a $3-5 billion dollars' investment into Ele.me, the food delivery corporation owned by Alibaba Group Holding Ltd. As part of the agreement, Alibaba intends to merge Ele.me with Koubei, which focuses on connecting restaurants with people's smartphones and tablets via Internet.

Ele.me and Meituan which is a similar company backed by Tencent Holdings Ltd are financially bleeding at the moment as they both offer heavy discounts on food orders to gain a larger part of the market share. With that in mind and along with the armies of staff responsible for food deliveries, one can assume how important this investment looks as a capital infusion for Ele.me. "The investment is also of strategic importance because both companies have to promote their respective payment services" says Okawa Morie, Chief Financial Office at RWM Holdings.

The money will come directly from the SoftBank Vision, which is a near $100 billion dollar fund led by Masayoishi Son, a Japanese investor who strongly believes in the future technologies. He admires robotics and A.I. (artificial intelligence) and thinks that they will play a key role helping people not only order food but schedule beauty treatments or hire domestic helpers as well. Reuters first reported the merger plan but both Alibaba and SoftBank refused to comment maybe because the negotiations are ongoing and the terms of the agreement may still change.

Meituan, which is currently the 3rd most valuable tech startup company in the world according to CB Insights, posted a net loss of $2.8 billion dollars last year followed by a pace of growth as a result of a much-anticipated Hong Kong public offering. Ele.me on the other hand which was valued at $9.5 billion dollars in April, has never announced detailed financials so far but Chief Executive Officer Wang Lei said that the industry is in its early phases and monetization isn't a priority for now. Ele.me has already decided to spend more than $400 million dollars this quarter alone in order to wrest business from Meituan and ultimately control half of the Chinese market for food delivery.

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SOURCE RWM Holdings

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