Chinese ecommerce giant alibaba plans to take a stake of up to 10 per cent in dufry, the worlds largest operator of airport duty-free shops, as part of an emergency sfr700m capital raising.

Alibaba will join private equity group advent international in underwriting a rights issue due to be presented to dufry shareholders on tuesday.

The swiss company is seeking to shore up its balance sheet as the pandemic batters global travel. in an agreement announced last month, advent said it would purchase up to sfr455m ($500m) of shares issued in the capital increase not taken up by existing shareholders.

Alibaba is to participate at the same price sfr28.5 a share up to a value of sfr250m, dufry said on monday. as part of the deal, basel-based dufry will also enter into a new joint venture with alibaba in china.

Shares in dufry rose 18 per cent to just over sfr33 after the announcement.

The companys market value hit a 10-year low in march, dipping to just sfr1.6bn.

Dufry has reeled as the coronavirus pandemic has flattened its business, with airport footfall dwindling across its core european and north american markets.

In june, the swiss company announced plans for radical cost-cutting measures, with management targeting the loss of around 10,000 jobs one-third of the companys workforce. dufry, which operates more than 2,500 retail stores in airports worldwide, said revenues could drop up to 70 per cent this year.

In a statement on monday, dufry said it hoped the collaboration with alibaba would speed up dufrys digital transformation and unlock opportunities in the lucrative chinese market.

We are convinced the joint venture will capitalise on growth opportunities and will support dufry to become the leading digital travel retail company worldwide, said chief executive julindiaz.

Proceeds from the capital increase would be used to finance the buyout of remaining shares in us travel retailer hudson. dufry announced a $311m deal in august to buy the 42 per cent of hudson it did not already own and delist the company from the new york stock exchange.

The new capital will also be used to shore up dufrys balance sheet and invest in the companys digital efforts and new chinese venture, it said.

Alibaba said the partnership would serve to meet the growing consumer demand for international brands in china. the company declined to provide any further details on the joint venture.

The international collaboration comes after geopolitical tensions have clouded the chinese technology sector in recent months, with donald trumps administration ordering a sale of the us operations of tiktok, the app owned by chinas bytedance.

In august, as alibaba reportedbetter than expected sales growth, daniel zhang, chief executive, said that while globalisation was the long-term strategy, the company was in the near-term closely monitoring the change of the geopolitical environment as well as national policies of other countries.

Alibaba and fellow tech giant tencent have been active in chinese overseas investment over recent years.