The source quoted people familiar with the matter on Monday as saying that Alibaba is in advanced negotiations to invest nearly US$300 million (approximately Rs. 22 billion) in online luxury fashion retailer Farfetch.

After the news came out, London-based Farfetch’s share price rose about 16% to 32.59 US dollars (about 2,400 rupees).

The report also said that the two companies are still negotiating to establish a Chinese joint venture. The report added that Richemont, the owner of Cartier, which is cooperating with Alibaba to develop mobile applications, is also considering investing in Farfetch with the Chinese e-commerce giant.

Neither Farfetch nor Alibaba immediately commented.

Farfetch has included Alibaba’s competitors JD and Tencent as its investors and has been betting on China’s booming online luxury world. Chinese consumers account for one-third of global luxury purchases.

The source quoted the source as saying that the current terms of the deal with Tencent and JD will not prevent Alibaba from investing in Farfetch.

At the beginning of last month, Alibaba said it would invest 3.6 billion US dollars (approximately 264,24 crore rupees) to increase its stake in the large supermarket operator Sun Art, thereby gaining greater development in the Chinese retail market.

Alibaba hopes to further use its digital business to support Sun Art’s 481 hypermarkets and 3 medium-sized supermarkets in China. The reason for this move is that as the growth of traditional e-commerce has slowed, the company has steadily expanded its business in offline retail in China. Alibaba is buying shares from the French multinational company Auchan Retail International SA, which has launched two of China’s largest supermarket chains.

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Alibaba already owns a 21% stake in Sun Art through a division and will increase its stake to around 72% by acquiring a similar stake in A-RT Retail Holdings, which owns 51% of Sun Art.

© Thomson Reuters 2020

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