Chinese e-commerce giant Alibaba on Tuesday announced a restructuring that will split the group into six separately listed entities, a big change for the company.
“The market is the best test, and any company will be able to proceed with independent fundraising and an IPO when ready,” group chief Daniel Zhang said in a letter to employees.
This restructuring will “create value for shareholders and stimulate market competitiveness,” the Hangzhou-based company (east) assured in a press release, specifying that it was “the most important restructuring in terms of governance in 24 years “ of the existence of the group.
The six new entities will each have a CEO and a board of directors.
A special case for Taobao, the very popular online sales platform in China, which will remain 100% owned by the Alibaba Group.
Like other Chinese internet giants, Alibaba has been penalized by the Chinese government’s takeover of the technology sector in recent years. In 2020, the authorities notably thwarted a gigantic IPO for its subsidiary Ant Group.
Beijing appears to have relaxed somewhat since then, and in early January Chinese authorities finally gave Alibaba’s payments subsidiary the green light to raise more than €1 billion in Hong Kong funds.
According to China’s Ministry of Industry and Information Technology, total sales of Chinese internet companies fell by just over 1% to 1.46 trillion yuan in 2022, the first drop in almost a decade.
As of Feb. 23, Alibaba had reported “strong growth” in profitability “in the most recent quarter.”
In November, the group announced a loss of 2.7 billion euros for the quarter ending September 2022.
Alibaba posted revenue of €34 billion in the quarter ended December, up 2% year-on-year.
Alibaba founder, Chinese billionaire Jack Ma, made a rare public appearance in China on Monday. In 2019 he left the management of his group to devote himself fully to philanthropic activities.