Chinese e-commerce giant Alibaba has confirmed plans to split into smaller groups so each can pursue an independent IPO.
Alibaba Group Holding Limited (NYSE: BABA) recently announced plans to split into six business units, each capable of pursuing an IPO. The move aims to “unlock shareholder value and promote market competitiveness,” according to the Chinese e-commerce giant.
Alibaba’s IPO-focused split is also the most significant restructuring in the Hangzhou-based company’s history. The company’s shares rose more than 9% in US pre-market trading after the announcement.
In the same announcement, Alibaba revealed that each business group will have a chief executive officer and a board of directors. Alibaba seeks to reinvigorate growth by giving each of its six groups the ability to raise external capital and go public. The Asian e-commerce powerhouse has endured a tough few years of slowing economic growth in its home country of China. In addition, the company has endured a period of heavy regulation by the Chinese government, losing billions of dollars in market value.
But Alibaba’s restructuring comes amid signs Beijing is looking to revive China’s economic growth. The country is reportedly looking to reopen its tech business as Alibaba founder Jack Ma returns home after spending months abroad.
Insight into the newly split Alibaba IPO-focused business group
Alibaba’s six offshoot business groups revolve around the company’s strategic priorities. These groups include Cloud Intelligence Group, Taobao Tmall Commerce Group, and Local Services Group. Others include Cainiao Smart Logistics, Global Digital Commerce Group, and Digital Media and Entertainment Group.
Alibaba CEO Daniel Zhang will reportedly head up the Cloud Intelligence Group with its cloud and artificial intelligence activities. Meanwhile, Alibaba’s Taobao Tmall Commerce Group caters to online shopping platforms such as Tmall and Taobao. The e-commerce giant also said Local Services Group, led by Chinese entrepreneur Yu Yongfu, will cover its food delivery service Ele.me and mapping. Cainiao Smart Logistics will house his Alibaba logistics services and executive Wan Lin will continue to serve as CEO.
Led by Jiang Fan, Alibaba’s Global Digital Commerce Group comprises the company’s international e-commerce businesses, including AliExpress and Lazada. Led by Fan Luyuan, his sixth business, his Digital Media and Entertainment Group, constitutes Alibaba’s streaming and film business.
Apart from the IPO, this split will allow Alibaba to focus on its respective service offerings. Over the years, the company has grown into a comprehensive business providing e-commerce, streaming, cloud computing and logistics services.As explained by Zhang statement:
“This transformation will enable all businesses to be more agile, make better decisions and respond more quickly to market changes.”
Each business unit can pursue an independent initial public offering, but Taobao Tmall Commerce Group remains wholly owned by Alibaba.
Alibaba Accounting Third Quarter 2023 Report
Last month, Alibaba released its financial results for the third quarter of fiscal 2023, which exceeded expectations. The company made revenue of 247.76 yuan ($35.92 billion) against a consensus estimate of 245.18 billion yuan ($35.65 billion).
At the time, Alibaba’s stock was also up 7% year-to-date.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to explain the cryptocurrency story down to the basics so that anyone can understand it without much background knowledge. Krypto When he’s not heavily involved in storylines, Tolu enjoys music, loves to sing, and is also an avid movie buff.
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