Mainland e-commerce titan Alibaba Group continues its spending spree by announcing it is buying into Youku Tudou with a US$1.22 billion outlay. Alibaba and Yunfeng Capital, a private equity firm co-founded by its founder Jack Ma Yun, will buy the stake in the video-sharing website - mainland's Youtube - with Alibaba holding 16.5 per cent of the stake and Yunfeng 2 per cent, according to a Youku Tudou statement. The deal will close in the "near future". With its initial public offering slated for the next few days in the United States, Alibaba has transformed the scale of its operations with about 40 billion yuan (HK$49.6 billion) in investments since Ma stepped down as chief executive last year. Li Zhi, the chief analyst at Analysys International, said Alibaba was completing its foray into the entertainment sector. "Video is an important part of online entertainment business, which is a market with huge potential, and Alibaba has the resources to expand in this market," Li said. She said Alibaba had set up a well-rounded entertainment business structure, with music, reading, games and now video. For Youku, the most important aspect was the capital from Alibaba, said Li. "Money is important for video websites because the bandwidth and content copyright are both hugely costly." Youku chief executive Victor Koo said Alibaba's investment "will strengthen Youku Tudou as China's largest online video platform and further differentiate our services". Li said it was too early to discuss Alibaba's supposed challenge to Tencent's entertainment empire. "Alibaba has been expanding into the game business for a long time, but we haven't seen much impact on other game operators," she said. Alibaba is preparing for a high-profile US initial public offering and has conducted several mergers and acquisitions over recent months. In January, Alibaba joined Yunfeng to take a controlling stake in Citic 21CN, a loss-making drug data firm, for HK$1.33 billion. The investment was to tap into Citic 21CN's vast pool of pharmaceutical product data.