Alibaba is planning to lead a $US1 billion (£770 million) investment into food delivery service Ele.me, Bloomberg reports, citing sources familiar with the matter.
The funding will reportedly give Ele.me a valuation of $US5.5 billion (£4.27 billion) to $US6 billion ($US4.66 billion), possibly making it the most valuable company of its kind in the world.
Ele.me is one of the biggest companies operating in China’s busy food delivery market, which is itself enormous due to the sheer number of people in the country.
While relatively few companies in the space are turning a profit, tech giants such as Amazon and Uber have launched their own food delivery services (Amazon Restaurants and UberEATS) in the last couple of years in a bid to capture a slice of this new market.
But the US tech giants are yet to infiltrate the Chinese market, leaving a number of local players trying to battle it out — albeit with a little bit of competition from European companies like Delivery Hero, which is backed by Germany’s Rocket Internet.
Ele.me has already raised $US2.34 billion (£1.81 billion) but the fresh influx of capital would reportedly help it to take on one of its key rivals, Meituan, which has been heavily backed by Tencent — another Chinese tech behemoth.
Sources familiar with the investment reportedly told Bloomberg about the upcoming investment, saying that Alibaba will team up with its financial affiliate, Ant Financial, on the funding round.
The investment would reportedly be the second largest into a privately-owned Chinese startup, losing out only to Uber rival Didi Chuxing, which raised a $US5.5 billion (£4.27 billion) round last month.
Alibaba and Ele.me did not immediately respond to Business Insider’s request for comment.
Get the latest Alibaba stock price here.