New | Alibaba buys 201.5 million shares in Lianhua Supermarket to become second-largest shareholder

Lianhua Supermarket Holdings’ shares were halted in Hong Kong after the retailer’s stock jumped by almost 22 per cent following the announcement that Alibaba Group Holding has emerged as its second-largest shareholder.

The stake purchase is the latest in a long line of Alibaba investment in brick and mortar shopping malls, part of a strategy adopted by the e-commerce giant since 2015 to broaden its exposure to markets where online and offline retailers are converging.

Lianhua shares rose to a two-month high of HK$3.83 before trading was halted on the Hong Kong stock exchange.

Alibaba, operator of the world’s largest online shopping platform, said it would buy 201.5 million shares of Lianhua, giving it 18 per cent of the supermarket operator and becoming its second-largest shareholder, according to a filing to the Shanghai Stock Exchange issued by the retailer’s parent Bailian Group.

The investment by Alibaba, owner of the South China Morning Post, follows a February announcement of a strategic tie up with Bailian to use big data to improve sales at its physical stores, the largest retailer by store numbers in China.

Lianhua operates more than 3,600 outlets throughout China.