Alibaba said it was planning to split into six units and explore fundraisings or listings for most of them, in the biggest restructuring of the technology conglomerate in its 24-year history. — Bloomberg
BEIJING: Investors cheered a major revamp of Alibaba Group as a sign Beijing’s crackdown on the corporate sector was nearing an end, sending shares of the Jack Ma-founded company and its peers soaring.
Alibaba said on Tuesday it was planning to split into six units and explore fundraisings or listings for most of them, in the biggest restructuring of the technology conglomerate in its 24-year history.
The move represented a light at the end of the tunnel for many investors who had seen a wave of regulatory blitzes as a major cloud hanging over China’s private sector.
“We think this is likely a sign that we are moving closer to the end of the regulatory scrutiny on Alibaba and we would expect that the company moves back into the good graces of the regulators and policy makers after this,” said Jon Withaar, head of Asia special situations at Pictet Asset Management.
The company said it will hold a conference call today to discuss its plan to split.
China’s wide regulatory crackdown over the last couple of years on its marquee domestic companies, mainly from the Internet, private education and property sectors, had wiped off billions in market values and weighed on investor sentiment.
Alibaba said on Tuesday it would split into six units – Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group and Digital Media and Entertainment Group.
The group had been planning to spin off individual business units for a long time, according to two sources familiar with the company’s thinking.
“There was a consensus within and outside Alibaba that the stock was trading at a major discount to the inherent value of the businesses,” said one of the people, adding that the company had become “too bloated.”
The person said there would be five initial public offerings (IPOs) from the units, while Taobao and Tmall, Alibaba’s core revenue drivers, would remain with the current listed entity.
Hong Kong is the most likely venue for these IPOs, said the person, and a separate source familiar with Chinese tech companies’ capital markets transactions.
Alibaba did not immediately respond to a request for comment.
In Japan, SoftBank Group Corp, which has a 13.7% stake in Alibaba, shot up 6%. SoftBank did not respond to a request for comment. — Reuters
