Singapore, March 29 (IANS) Shares of Chinese technology giant Alibaba have jumped after it announced a plan to break up the company.
The firm says five of the six units created by the move will explore raising fresh funding and initial public offering (IPO) options, the BBC reported.
Alibaba shares gained more than 14 per cent in New York on Tuesday and were more than 13 per cent higher in Hong Kong on Wednesday.
Its US-listed shares have fallen by almost 70 per cent 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 in the last three years, resurfaced in China this week after a long absence, the BBC reported.
Alibaba said the decision to split up the business is the biggest restructuring in its 24 year history.
The units will have their own chief executives and boards of directors. They will be allowed to raise capital and seek stock market listings, except for the online retail platform Taobao Tmall Commerce Group, which will remain wholly owned by Alibaba.
Alibaba said the units will “capture opportunities in their respective markets and industries, thereby unlocking the value of Alibaba Group’s respective businesses”.
“The market is the best litmus test, and each business group and company can pursue independent fundraising and IPOs when they are ready,” chief executive Daniel Zhang said in a letter to staff.
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 lead for technology, media and telecommunications at investment research firm Third Bridge.
“Over the past few months, the government has been less harsh on big technology companies. People are wondering if this could be the beginning of a period where the government shifts from being almost an adversary to companies, to actually supporting them,” he added.
–IANS
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