Alibaba Group Holding Ltd. discussed raising at least $1 billion for Lazada before calling off negotiations with potential investors when talks bogged down over the Southeast Asian online mall’s valuation.

The Chinese e-commerce giant had aimed to secure financing for Lazada as a precursor to a spinoff of the Singapore-based company and a potential initial public offering, people familiar with the matter said. Alibaba had hoped to snag at least $1 billion but backed off after failing to secure its envisioned valuation, the people said, asking not to be identified discussing confidential deliberations.

Alibaba has mothballed the fundraising for now because it doesn’t need funds and markets remain volatile, given shrinking valuations for tech companies from New York to Hong Kong, the people said. Investors again punished Chinese tech stocks this week after speculation grew that regulators are amping up scrutiny of the industry.

Alibaba remains intent on eventually spinning off Lazada as a separate company, the people said, as competition heats up with fast-moving rivals like Sea Ltd.’s Shopee and Indonesia’s GoTo. Sea raised about $6 billion in a sale of US shares and convertible bonds last year, while GoTo is raising capital to grab a larger slice of online retail in the region.

The fundraising attempt could resume if conditions change, the people said. Representatives for Alibaba and Lazada declined to comment.

China’s biggest online retailer is looking abroad for growth as its home market cools and Beijing’s Covid Zero policy continues to depress consumption across the world’s second-largest economy. In November, Alibaba cut its fiscal 2022 outlook after reporting sales that missed analyst estimates for a second straight quarter.

Competition is intensifying just as China grapples with the widest Covid-19 outbreak since the virus first emerged in Wuhan. Rivals like JD.com Inc. and Pinduoduo Inc. are stepping up investments to win over Alibaba’s users. Gross domestic product expanded 4% in the fourth quarter of last year, cooling further from the 4.9% growth in the previous period, with consumption stuck below pre-pandemic levels.

In December, Alibaba Chief Executive Officer Daniel Zhang and his lieutenants identified overseas business, poorer cities and cloud technology among the company’s prime growth drivers in the years ahead.

Lazada, Alibaba’s Southeast Asian arm, Trendyol in Turkey and Daraz around South Asia have evolved into important units of the company. Alibaba outlined a long-term goal of quintupling Lazada’s gross merchandise value, the sum of transactions across its platforms, to $100 billion. It wants the business to serve more than 300 million users eventually, according to a slideshow posted on its website.

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