SHANGHAI Alibaba Group Holding Ltd (BABA.N) has agreed to invest $1.25 billion in Chinese online food delivery service Ele.me, leading business weekly Caixin reported on Friday.
The report, citing unidentified sources, said Alibaba will obtain a 27.7 percent stake in Ele.me, becoming its biggest shareholder.
Alibaba and Ele.me both declined to comment.
Ele.me, which roughly translates as 'Hungry Now?', is part of a trend in China for what is known as online-to-offline (O2O) services. These include taxi hailing and restaurant review apps that link smartphone users with offline businesses.
Earlier this year, the food delivery service firm raised $350 million from investors including CITIC Private Equity, Tencent Holdings Ltd (0700.HK), Alibaba rival JD.com Inc (JD.O), Dianping and Sequoia Capital.
As more Chinese use their phones for everything from shopping to booking restaurants, China's internet giants Alibaba, Tencent and Baidu Inc (BIDU.O) are increasingly investing in these services to attract more users to their own platforms.
Alibaba, the world's biggest e-commerce company, and social networking and video games titan Tencent together spent more than $8 billion last year alone backing sometimes strikingly similar ventures, such as taxi hailing apps Kuadi Dache and Didi Dache.
(Reporting by Kazunori Takada; Editing by Shri Navaratnam)