Alibaba: China’s tech giant shares jump after announcement of break-up plan

  • By Annabelle Liang
  • Business reporter

Shares of Chinese tech giant Alibaba have jumped after it announced a plan to break up the company.

The firm says five of the six entities created by the move will explore opportunities to raise new financing and initial public offerings (IPOs).

Alibaba shares rose more than 14% in New York on Tuesday and were more than 13% higher in Hong Kong on Wednesday.

Its US-listed shares have fallen nearly 70% since 2020 on concerns over Beijing’s crackdown on the tech sector.

The move comes after reports that Alibaba founder Jack Ma, who has rarely been seen in public for the past three years, reappeared in China this week after a long absence.

The units will have their own managing directors and boards. They will be allowed to raise capital and seek IPOs, except for online shopping platform Taobao Tmall Commerce Group, which remains wholly owned by Alibaba.

“The market is the best litmus test, and each business group and company can pursue independent fundraising and IPOs when they are ready,” CEO Daniel Zhang said in a letter to employees.

China technology analyst Rui Ma told the BBC that investors saw value in the restructuring because Alibaba’s business units will be able to grow at their own pace.

She added that each unit will also be more streamlined and “less likely to be subject to antitrust violations”.

Alibaba’s restructuring comes after years of tough regulation for Chinese technology firms, said Scott Kessler, global sector leader for technology, media and telecommunications at investment research firm Third Bridge.

“Over the last few months, the government has been less tough on big tech companies. People are wondering if this could be the beginning of a period where the government goes from being almost an adversary to companies, to actually supporting them,” he added. .

He met with staff and toured classrooms at Yungu School in Hangzhou, the city where Alibaba is headquartered, the newspaper said.

Mr Ma was the most high-profile Chinese billionaire to disappear during a crackdown on tech entrepreneurs.

The 58-year-old has kept a low profile since criticizing China’s financial regulators in 2020. He stepped down as chairman of Alibaba in September 2019.

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