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In a recent announcement, Alibaba Group stated its intention to monetize non-core assets. Also, they would give up control of certain businesses. The decision came after a regulatory crackdown wiped 70% off its shares.
CEO Daniel Zhang said breaking the company into separate units would increase agility. Moreover, it enhances the possibility of launching their own initial public offerings (IPOs).
Zhang told, “Alibaba will be more of the nature of an asset and capital operator than a business operator.”
The announcement follows Alibaba’s recent and most significant restructuring. It will change into a holding company structure split into six business units. Each unit will have its own boards and CEOs.
Alibaba CFO Toby Xu confirmed that the group would “continue to evaluate the strategic importance of these companies.” It will “decide whether to continue to retain control” after they go public. In the short term, Alibaba will keep seats on the boards of the new business units.
According to Xu, the company plans to continue monetizing non-strategic assets. Alibaba’s reorganization will not impact its share repurchase plan. The plan expanded to $40 billion by late 2022.
Some analysts believe that the restructuring could protect Alibaba shareholders from regulatory pressures. Besides, it will allow investors to value each business division independently.
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