The Chinese multinational technology company Alibaba Group is divided into six distinct units and is looking for distinct fundraisings and listings for each of the six units. Analysts believe that breaking up the empire will help reduce the number of investigations and examinations conducted by authorities and regulators. This plan was reported by the Alibaba bunch itself on Tuesday after China vowed to facilitate its guidelines and begin supporting its confidential endeavors.
The share prices of Alibaba Group have decreased by 70% since Chinese regulators began their crackdown on massive private technology companies in 2020. However, since China announced that it would ease its regulatory crackdown, prices have increased by 14%.
Alibaba Group announced that it would now be divided into six units: the 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 company dubbed this the largest restructuring in its 24 years of existence.
The decision to split into six separate businesses, which was made a day after Alibaba founder Jack Ma returned to China, is thought to help Alibaba Group escape regulatory scrutiny after years of scrutiny.
“The original intention and fundamental purpose of this reform is to make our organization more agile, shorten decision-making links, and respond faster,” declares Daniel Zhang, CEO of Alibaba.
Alibaba Group will now be the holding company for the majority of these split-up businesses, while it will be the CEO of Cloud Intelligence Group following the split.
Alibaba Group will continue to be led by Daniel Zhang, and each of the six companies will have its own CEO and board of directors, giving them the ability to raise capital or even launch an initial public offering (IPO).
Taobao Tmall Commerce will continue to be owned entirely by the Alibaba Group, despite the fact that all of the other groups will separate.
Both small and large investors are of the opinion that this split puts an end to all of Alibaba Group’s concerns regarding the company’s compliance with regulations and its potential for growth.
Global Macro Research managing director Hariharan stated, “By paving the way for Alibaba’s various new units to list, the Chinese government may be signaling less hostility toward its tech giants as a placatory message to US and international investors.”
