Zalora gets funding for Philippines branch

Photo credit: gloffs / 123RF.

The Philippines’ Ayala Corporation has forayed into ecommerce with the purchase of a huge stake in Zalora Philippines for an undisclosed sum.

The nation’s oldest conglomerate, owned by the seventh richest family with a US$4.1 billion net worth, announced it signed a deal for a 43.3 percent stake in BF Jade E-Services, which owns and operates the fashion ecommerce site in the archipelago. Ayala subsidiaries Ayala Land (property and mall developer), BPI Capital (investment bank), and Kickstart Ventures also bought small stakes.

Together the group owns 49 percent of Zalora. The rest is still owned by majority shareholder, Global Fashion Group (GFG).

“The investment demonstrates how we, at Ayala, look at innovation and growth opportunities. We see the potential of ecommerce in the country, and believe that the group can benefit and add tremendous value to Zalora,” says chairman and CEO Jaime Augusto Zobel de Ayala in a statement.

According to a 2014 study by Ken Research, the Philippines’ ecommerce market can expect a stupendous compound annual growth rate of 101 percent from 2013 until 2018, thanks to rising internet and social media adoption.

Zalora Philippines was co-founded in 2012 as part GFG, a network of fashion ecommerce startups – including Namshi and The Iconic – that’s partly owned by Rocket Internet.

GFG CEO Romain Voog expects Zalora to form synergies with the Ayala businesses.

“Operating in an archipelago like the Philippines is complex and competitive and this partnership […] is a significant step forward in our journey to strengthen Zalora’s leadership position,” Christopher Daguimol from GFG’s corporate communications tells Tech in Asia.

Ayala is also engaged in telecommunications, water distribution, power generation, transportation, education, healthcare, automotive, and electronics manufacturing services.

Big losses

Rocket Internet saw nearly US$700 million in losses for the most part of 2016, citing a slump in the value of its fashion ecommerce startups, which were collectively downgraded by more than US$2 billion.

It’s not short on cash, however, with US$1.7 billion in the bank and a further US$1.16 billion available at its portfolio firms as of the first nine months of last year.

The German firm has been selling assets in the region and globally, including Lazada and Foodpanda.

Whether more Zalora branches will be sold off, Christopher says, “We are always open to consider options when relevant as we aim to maximize shareholder value and continue to build sustainable leadership in online fashion in Asia.”