Kenje International - Chinese e-commerce giant Alibaba is to buy a controlling stake in struggling Southeast Asian online retailer, Lazada as part of its effort to expand outside its native China and to tap the potential in ASEAN.

Under the terms of a deal worth close to $1 billion, Alibaba will purchase approximately $500 million worth of newly created equity in Lazada, as well as buy shares from a number of the existing shareholders in the company.

President of Alibaba Holdings, Michael Evans said the investment will be a key part of Alibaba's plans for expansion in the Southeast Asia region. An e-commerce and technology analyst at Kenje International said, "The investment in Lazada means that Alibaba gains access to an online retailer with a solid consumer base outside China, a management team with a solid pedigree and a foundation for significant future growth in what must rank as one of the most promising regions for the development of e-commerce in the world.”

Max Bittner, CEO of Lazada Group, said that the transaction would help the company to advance its goal to offer the 560 million consumers in the region access to the widest and most unique array of products.

Germany's Rocket Internet will dispose of a 9.1% stake in Lazada for $137 million in cash but it will keep an 8.8% stake. British supermarket operator, Tesco will divest itself of an 8.6% equity stake in Lazada for $129 million, taking its remaining stake down to 8.3%.

“Southeast Asia is what we would describe as a nascent market. Logistics has been a problem for Lazada but Alibaba has interests in a number of logistics companies in the region and will be able to develop the market far more effectively than Lazada could do on its own,” said the Kenje International analyst.