In what can be termed as a reflection of its rapidly increasing business, Chinese internet giant Alibaba, will enter 2016 with a staggering $36 Billion available for acquisitions and investments.
According to information via Bloomberg, which cited data from BNP Paribas analysts, Alibaba along with two other Chinese internet behemoths, namely Tencent and Baidu, may have as much as $80 billion available for mergers and acquisitions.
That is certainly a lot of cash in one place and to put things in perspective, is more than the net worth of many prominent corporations.
The data, which was calculated on the basis of the net cash available, the company’s ability to take on debts and projected cash flows, put Tencent at a close second with $35 Billion and Baidu at a distant third with $15 Billion in its kitty.
Judging by the trend so far, at least a part of this cash can be expected to go towards the O2O — Online to Offline — services market. In 2015 for instance, this trio of companies — also called BAT — went on a spree of acquisitions in the sector, leading to consolidation and the formation of entities such as Didi Kuaidi.
Online to Offline services have seen a massive spike in recent times with start-ups catering to your every want and whim at a click of your smartphone. However, a lot of these start-ups had been running upon sheer investments and were still waiting to show profits or in some cases, to break even.
Well, now that the initial enthusiasm has been tempered by the prospects of a slowing economy, the flood of investors looking to pour money into these O2O services has slowed to a trickle, with many companies under pressure to sell.
Which leads us back to BAT — which has been acquiring and integrating these services since the past year. In fact, 2015 saw the trio acquire almost 80 companies, valued at a total of $30 Billion.
However, some experts also believe that with the Chinese market increasingly moving towards saturation, the internet behomoths may just find their rapid growth slowing down to some extent.