Alibaba to split into 6 business units, plan separate IPOs

Alibaba Group Holding will be divided into six business units in what is considered a rare and historic move as it is the biggest restructuring exercise the group has undertaken since being founded in 1999.

Six units of the Hangzhou-based multinational technology company will explore separate initial public offerings (IPOs), according to its blog post. This unique move by the Chinese group could set a precedent for other companies in the country.

The group said this decision will “unlock shareholder value and foster market competitiveness”. The six business units will each have their own CEOs and board of directors while the group Chairman and CEO, Daniel Zhang will continue to head the conglomerate, which will follow a holding company model.

“The move marks the most significant governance overhaul in the platform company’s 24-year history and positions Alibaba’s businesses to become more agile so as to better capture market opportunities and stimulate growth,” said the company in a statement.

The group will be divided into: Cloud Intelligence, Taobao Tmall Commerce, Local Services, Cainioa Smart Logistics, Global Digital Commerce, and Digital Media and Entertainment units.

Alibaba, valued at over $220 billion, expects this move to “provide markets with better visibility into the value of Alibaba’s various businesses and unlock shareholder value”. Given that each unit will have customised incentive plans, the group believes this would “create greater ownership”.

The company’s shares were up nearly 9% in pre-market trading on the New York Stock Exchange at around 9:08 am Eastern Daylight Time.