Home/ News / World/  Alibaba to decide on control over six business units after IPOs

Alibaba Group's breakup into separate companies will allow its business units to become more agile and eventually list on their own, the tech conglomerate's chief executive Daniel Zhang said on Thursday.

His comments came two days after Alibaba announced its largest restructuring in the company's history, which will see it change into a holding company structure with six business units, each with its own boards and CEOs, according to the news agency Reuters. 

Speaking to investors on a conference call, Zhang said Alibaba will be more of the nature of an asset and capital operator than a business operator, in relation to the business group companies. 

He added that the business units will have their own CEOs and boards, though Alibaba will retain seats on those boards in the short term. 

“Alibaba began laying the groundwork for the restructuring a few years ago. The business units could pursue public listings on their own in the future," Zhang told investors. 

After these units go public, Alibaba will continue to evaluate the strategic importance of these companies and will decide whether or not to continue to retain control, Alibaba CFO Toby Xu said on the call, adding that the changes will go into effect immediately. 

As a result of the restructuring, each business unit can pursue independent fundraisings and IPOs when they're ready, Xu said, when asked about the timeline for the listings, Reuters reported. 

“We believe the market is the litmus test so each company can pursue financing and IPO as and when they are ready. However, Alibaba will decide whether the group wants to keep strategic control of each unit after they go public," Xu said.

Meanwhile, the group is also planning to continue to monetize non-strategic assets in its portfolio to optimize its capital structure, said Xu.

Some analysts say Alibaba is currently undervalued as a standalone conglomerate and a breakup would allow investors to value each business division independently.

Analysts said that the restructuring could also better protect Alibaba shareholders from regulatory pressures, as penalties levied on one division in theory would not affect the operations of another. 


(With Reuters inputs)

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Updated: 30 Mar 2023, 07:29 AM IST
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