Alibaba to Split into 6 Business Groups Capable of Individual IPO as Company Prepares for Major Restructuring

Alibaba Group Holding Limited (NYSE: BABA) recently announced plans to split into 6 business units, each capable of pursuing an IPO. According to the Chinese e-commerce giant, the move seeks to “unlock shareholder value and boost market competitiveness”.

The Alibaba IPO-focused divestiture also represents the most significant restructuring in the Hangzhou-based company’s history. The company’s shares rose more than 9% in US pre-market trading following the announcement.

In the same announcement, Alibaba revealed that each business group would have its own chief executive officer and board of directors. By equipping each of the six conglomerates with the ability to generate outside funding and go public, Alibaba seeks to reinvigorate growth. Asian e-commerce powerhouse China has faced some tough years of slowing economic growth in its home country. In addition, the company faced a sustained period of tight regulation from the Chinese government, which wiped billions off its market value.

However, Alibaba’s restructuring comes amid signs that Beijing is looking to revive economic growth in China. The country is reportedly warming back up to technology businesses, with Alibaba’s founder jack ma Back home after months abroad.

Insight into the newly split Alibaba IPO focused business groups

The six offshoot Alibaba business groups will be centered around the company’s strategic priorities. These groups include Cloud Intelligence Group, Taobao Tmall Commerce Group, and Local Services Group. The others are Cainiao Smart Logistics, Global Digital Commerce Group and Digital Media & Entertainment Group.

Alibaba CEO Daniel Zhang will reportedly head the Cloud Intelligence Group, which emphasizes cloud and artificial intelligence activities. Meanwhile, Alibaba’s Taobao Tmall Commerce Group will complete its online shopping platform including Tmall and Taobao. The e-commerce giant further said that the local services group headed by Chinese entrepreneur Yu Yongfu will cover its food delivery service Ele.me and Mapping. Cainiao Smart Logistics houses Alibaba’s logistics service and sees business executive Wan Lin as CEO.

Alibaba’s Global Digital Commerce Group, headed by Jiang Fan, includes the company’s international e-commerce businesses, such as AliExpress and Lazada. The sixth business group, Digital Media & Entertainment Group, headed by Fan Luyuan, will constitute Alibaba’s streaming and movie business.

Aside from an IPO, the split allows Alibaba to focus exclusively on each of its service offerings. Over the years, the company has evolved into an all-encompassing business offering e-commerce, streaming, cloud computing and logistics services. as Zhang explained statement,

“This transformation will enable all of our businesses to become more agile, enhance decision making and react faster to market changes.”

Although each business unit can pursue independent initial public offerings, Taobao Tmall Commerce Group is wholly owned by Alibaba.

Alibaba Fiscal Q3 2023 Report

Last month, Alibaba published its fiscal Q3 2023 earnings report exceeded expectations, The company posted revenue of 247.76 yuan ($35.92 billion), against consensus estimates of 245.18 billion yuan ($35.65 billion).

At the time, Alibaba’s shares were also up 7% from the beginning of the year.

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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to strip crypto stories down to the basics so that anyone anywhere can understand without a lot of background knowledge. When he is not delving deep into crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.