Alibaba Group (9988.HK) is planning to split into six units and explore fundraisings or listings for most of them, it said on Tuesday, in a major revamp as China vows to ease a sweeping regulatory crackdown and support its private enterprises.
The U.S.-listed shares of the Chinese e-commerce conglomerate, which have lost nearly 70% of their value since the curbs were imposed in late 2020, rose more than 14%.
Alibaba said the biggest restructuring in its 24-year history would see it 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 revamp comes a day after Alibaba founder Jack Ma returned home from a year-long stay abroad, a move that dovetailed with Beijing’s effort to spur growth in the private sector after two years of crackdown.
Analysts said the breakup could ease scrutiny over the tech giant whose sprawling business has been a target of regulators for years.
“The original intention and fundamental purpose of this reform is to make our organisation more agile, shorten decision making links and respond faster,” Chief Executive Daniel Zhang said in a letter to staff, which was seen by Reuters.
Each business group, he said, had to tackle the rapid changes in the market and each Alibaba employee had to “return to the mindset of an entrepreneur”.
Zhang will continue as chairman and CEO of Alibaba Group, which will follow a holding company management model, and also serve as CEO of Cloud Intelligence Group.
Each of the six businesses will have a CEO as well as a board of directors and will retain the flexibility to raise outside capital and seek an initial public offering, the company said.
The decision could also be partly a fallout of the U.S. scrutiny of Chinese tech firms that raised national security concerns over TikTok and its parent ByteDance, said Tara Hariharan of emerging market hedge fund NWI Management.
“By paving the way for Alibaba’s various new units to list, the Chinese government may be signalling less hostility towards its tech giants as a placatory message to U.S. and international investors,” said Hariharan, managing director of global macro research.