Tesco Tapped Up For Fresh Asian Website Funds

Tesco (Xetra: 852647 - news) is being tapped up to inject tens of millions of pounds into an Asian e-commerce business even as the UK's biggest retailer's balance sheet is under pressure from a £200m-plus profit shortfall.

Sky News has learnt that Tesco has been asked to stump up in the region of $125m (£77.4m) in order to maintain a 25% stake in Lazada, which sells non-food products to consumers in south-east Asia.

Sources said that Dave Lewis, Tesco's new chief executive, and Robin Terrell, the interim UK boss who also oversees its digital activities, had not yet made a decision about whether to invest the money.

One insider said, however, that it was "highly unlikely" that Tesco would divert capital to a non-core business such as Lazada at a time when the company's finances are under intense scrutiny/

Mr Lewis will update the City on Thursday about Tesco's first-half performance after it emerged last month that profits had been overstated by around £250m in earlier statements.

Sky News revealed at the weekend that the final number is likely to be less than £250m , although the overstatement will nevertheless be material.

Lazada is controlled by Rocket Internet (Xetra: RKET.DE - news) , an internet incubator which recently listed its shares on the New York Stock Exchange.

Sources said it was looking to raise $500m at a pre-fundraising valuation of $1.5bn, implying that Tesco would need to invest $250m in order to avoid seeing its stake diluted.

Tesco's initial investment in Lazada, made in December 2013, was one of the more obscure deals sanctioned by Philip Clarke, who was ousted as the retailer's chief executive during the summer.

The retailer's operations in south-east Asian countries including Thailand are now viewed by analysts as a candidate to be sold as Mr Lewis seeks to streamline the group and recapture lost ground in the UK.

There was further bad news for Tesco on Tuesday when data from Kantar Worldpanel, a closely watched research agency, showed that its sales fell by 3.6% to £7.01bn during the 12 weeks to October 13, a fall worse than any of its main rivals.

Tesco declined to comment on its shareholding in Lazada.