Alibaba to Sell Stake in Its Consolidated Subsidiary to Focus on Growing its Core Business

 

On January 1, Alibaba $BABA (HKG: 9988) announced that its subsidiaries and New Retail sealed the deal with DCP Capital to sell all of its stake in Sun Art Retail Group Limited which represented 78.7% of the issued shares of Sun Art Retail (HKG: 6808). Through this deal, Alibaba continued its focus on the core businesses, AI and e-commerce.

 

The announcement specified that DCP Capital would acquire 7,027,297,350 shares of Sun Art Retail held by Alibaba's wholly-owned subsidiaries Jixin and Taobao China Holding Limited and 480, 369,231 shares of Sun Art Retail held by New Retail. The maximum amount to be received by Alibaba's subsidiary and New Retail is approximately HK$13,138 million.

 

In September 2023, Alibaba established two strategic focuses, namely user-first and AI-driven, and indicated that it would reshape its business around these two focuses.

 

Since then, Alibaba has orderly withdrawn non-core assets to focus on core business development. On December 17, Alibaba sold its entire stake in Yintai Group to a consortium consisting of Youngor Group (SHA: 600177) and Yintai Group (SZ: 000975) for approximately RMB 7.4 billion.

 

Subsequently, Sun Art Retail triggered buyers to acquire it. According to market analysts, Sun Art Retail's deal is a victory for every participant. DCP Capital is bullish on the consumer track and seeks cyclically stable returns. Sun Art Retail's good performance recordmatched DCP Capital's needs. Sun Art Retail will develop better with DCP Capital’s support. Meanwhile, Alibaba with reduced weight could tilt its resources in its strategic focuses and drive growth in its core business. The market is more optimistic about a lightly loaded Alibaba.

 

In its announcement, Alibaba emphasized that it would continue to improve the consumer experience with technological innovation and promote high-quality growth in the industry.