Tesco is to sell a stake in ecommerce firm Lazada to Alibaba for $129 million.

The deal, through Tesco Overseas Investments, will see the Chinese firm take an 8.6 per cent equity stake in Lazada, reducing Tesco’s 19.6 per cent share.

The proceeds will be used for general working capital, Tesco said.

Alibaba is also set to invest $500 million in Lazada, making the company the controlling shareholder in the ecommerce company and valuing Lazada at $1.5 billion. Tesco will hold an 8.3 per cent stake.

Lazada provides an ecommerce gateway for sellers and brands connecting with consumers in South East Asia. Tesco initially invested in the company in 2013, putting £124 million into Lazada.