Jack Ma’s Alibaba Group will have its first major investment deal weeks after it had to pay a $2.8 billion fine for anti-competitive business practices in the country. Ma is partnering with the Chinese government for this deal.

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A consortium led by Alibaba Group Holdings Ltd (Alibaba) and the Jiangsu provincial government is reportedly on the verge of finalising a deal to buy stake in Suning.com, one of China’s largest retailers of appliances, electronics and other consumer products, reported Bloomberg.

Hangzhou-based Alibaba, which already owns 20 percent stake (for an investment of $4.6 billion in 2015), will take control of the retail arm of Chinese billionaire Zhang Jindong’s Suning conglomerate.

Suning, which had a market value of about $8 billion before a trading halt on June 16, reportedly needs a bailout due to various challenges, including the slump in business following the COVID-19 pandemic and the promoter facing liquidity issues.

This deal is part of Alibaba’s ‘new retail’ business strategy, where offline and online shopping are seamlessly integrated. It will help Alibaba grab a share from the growing electronics business of its rival Richard Liu’s JD.com Inc (online retailer backed by Tencent Holdings Ltd).

Alibaba and Suning have long been close partners allying in key areas such as logistics and online shopping, among others.

Jiangsu capital Nanjing-based Suning’s retail outlets, distribution centres and last-mile delivery stations strategically fit Alibaba’s omnichannel model, said analysts.

Suning has a strong physical retail presence in China, especially in its eastern part, which includes Shanghai.

In the hypermarkets business, a consolidation of Suning.com (which has the fifth-largest nationwide share of 4.4 percent, as per 2020 data from Euromonitor International) with Alibaba’s units (Sun Art Retail Group Ltd has the biggest share at 13.7 percent as per Euromonitor) is in the offing.

This consolidation can challenge rivals such as Walmart Inc China, which has a 9.3 percent market share (Euromonitor) which has partnered with JD.com for online operations.

Under Alibaba’s chief executive officer Daniel Zhang, its new retail business revenues have grown to $25.6 billion, contributing one-fifth of its total revenue in FY21. Alibaba has forayed into the offline world with physical stores for its Freshippo grocery and food startup.

China’s State Administration for Market Regulation, the antitrust regulator, will have to approve the deal.

The regulator had earlier penalised Alibaba for not properly declaring a past investment in Intime Retail Group Co, and levied the $2.8 billion-fine as part of a wider anti-monopoly investigation.

This fine led to Alibaba posting an operating loss of $1.19 billion in Q4 FY21.

(Edited by : Shoma Bhattacharjee)