Alibaba Group To Decide On Control Over Its Six Subsidiaries Post IPO

The division of Alibaba Group into independent businesses would help its business segments to become more agile and eventually list on its own, said the internet conglomerate's CEO Daniel Zhang on Thursday.

His remarks come two days after Alibaba unveiled its greatest restructuring in company history, which would see the company transition into a holding company structure with six business groups, each with its own board of directors and CEO, according to sources.

On a conference call with investors, Zhang stated that, in comparison to the business group businesses, Alibaba will be more of an asset and capital operator than a business operator.

He went on to say that the business divisions will have their own CEOs and boards, albeit Alibaba would keep seats on those boards for the time being.

"A few years ago, Alibaba began preparing the framework for the restructure." "In the future, the business units may pursue independent public offerings," Zhang told investors.

As these entities go public, Alibaba will continue to analyse their strategic relevance and determine whether or not to maintain ownership, said Alibaba CFO Toby Xu on the call, adding that the adjustments will take effect immediately.

When questioned about the timeframe for the listings, Xu noted that as a result of the restructuring, each business unit can pursue standalone fundraisings and IPOs when they are ready.

“We believe the market is the litmus test so each company can pursue financing and IPO as and when they are ready. However, Alibaba will decide whether the group wants to keep strategic control of each unit after they go public," Xu said.

However, the business intends to continue monetizing non-strategic assets in its portfolio in order to improve its capital structure, according to Xu.

According to some experts, Alibaba is now undervalued as a standalone conglomerate, and a split would allow investors to evaluate each business segment separately.

Experts believe the reorganisation would also better safeguard Alibaba stockholders from regulatory constraints, since fines imposed on one subsidiary will not influence the operations of another.