Alibaba to Split Into 6 Units and Explore IPOs; Shares Pop 7%

Alibaba announced Tuesday that it would split its company up into six groups, with each group having the ability to raise funding from outside and become public.

This is the biggest reorganization ever in the history of the Chinese ecommerce giant.

Alibaba stated in a press release that this move was "designed to unlock shareholder values and foster market competition."

Alibaba's shares rose more than 7% during pre-market trading in the U.S.

Alibaba

The Chinese ecommerce giant announced Tuesday that it would split its company up into six groups. Each group will be able to raise funding from outside and become public. This is the largest reorganization of the Chinese ecommerce giant's entire history.

Each business group is managed by a CEO and board of Directors.

Alibaba stated in a press release that this move was "designed to unlock shareholder values and foster market competition."

Alibaba's shares rose more than 7% during pre-market trading in the U.S.

Alibaba has had a difficult couple of years, with a slowing economy at home and stricter regulations from Beijing. This resulted in the loss of billions on its stock price. Alibaba has

Growth has been a struggle in the last few quarters

.

Alibaba now wants to reinvigorate its growth through the reorganization.

Business groups will be based on the strategic priorities of each business. The groups are:

Cloud Intelligence Group:

Alibaba's CEO Daniel Zhang is the new head of this division, which will include cloud computing and artificial intelligence.

Taobao Tmall Commerce Group

This includes Taobao, Tmall and other online shopping platforms.

Local Services Group

Yu Yongfu, Alibaba's CEO, will oversee the company that includes its food delivery service Ele.me and mapping.

Cainiao Smart Logistics

Wan Lin continues as the CEO of this company, which houses Alibaba's logistic service.

Global Digital Commerce Group

Jiang Fan will be the CEO. This unit comprises Alibaba's international online businesses, including AliExpress.com and Lazada.

Digital Media and Entertainment Group

Fan Luyuan is the new CEO of Alibaba's streaming business.

Zhang said that each of these units could pursue an independent fundraising campaign and a public listing once they are ready.

Alibaba will retain 100% ownership of the Taobao Tmall Commerce Group.

600 billion dollars wipe out

Alibaba's stock price peaked in October 2020. Since then, the value of its shares has dropped by around $600 billion. Since then, China has cracked down hard on private technology companies, introducing new regulations and increasing scrutiny of the practices of domestic titans.

Alibaba's Fintech Affiliate Ant Group has been forced to comply with regulations

Cancel its mega-public listing

In November 2020. And in 2021.

Alibaba fined $2.6 billion

As part of a probe into antitrust.

Alibaba now wants to reinvigorate its growth. Alibaba has become a global giant, encompassing e-commerce, cloud computing and streaming services as well as logistics.

The six new businesses are seen by the company as a way of being more flexible.

Zhang stated in a press release that "this transformation will empower our businesses to be more agile, improve decision-making and enable faster response to market changes."

Reorganization comes as Beijing is showing signs of warming up again to technology companies, in an effort to revitalize economic growth.

Jack Ma, Alibaba’s charismatic and outspoken founder, who had been travelling abroad and out of the spotlight for several months, returned to China in what was perceived as a controversial move.

Olive branch from Beijing

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