China's Internet giant, Alibaba Group, has once again showed the world its financial might after it announced the purchase of an 18.5 percent stake in China's biggest video site for US $1.22 billion.

Alibaba teamed up with private equity firm Yunfeng Capital to buy the stake in Youku Tudou, which has been compared to YouTube. Yunfeng is co-owned by Jack Ma, the executive chairman of Alibaba.

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The deal, which was announced on Monday, gives Alibaba a wider foothold in China's growing online video sector and further accelerates its digital entertainment and video content strategy.

With the purchase, Alibaba now owns 16.5 percent of Youku Tudou while Yunfeng capital holds two percent. Alibaba CEO Jonathan Lu Zhaoxi will also be named one of Youku Tudou's board of directors.

Youku Tudou Chairman and CEO Victor Koo said the deal will help the video site build a cultural entertainment platform that combines online and offline entertainment.

Alibaba's shopping spree has already reached more than US $40 billion as it prepares for its IPO listing in the United States this year.

Early this month, Alibaba agreed to pay US $1.06 billion for a 20 percent stake in Wasu Media Holding Company, an internet TV firm in China, as part of its foray into the rapidly growing digital-content market.

The Wasu Media investment was announced on the same week that Jack Ma, the billionaire founder of Alibaba, paid 3.3 billion Yuan (around US $527 million) for a controlling stake in Hundsun Technologies Inc., a Chinese financial software development company.