Alibaba Group Holding Ltd.’s overhaul could serve as a template for a restructuring of China Tech itself: a shake-up that achieves Beijing’s aim of carving up the country’s tech titans while unlocking potentially billions of dollars in pent-up shareholder value.
China’s online commerce leader surprised markets Tuesday by announcing plans to split its $220 billion empire into six units that will individually raise funds and explore initial public offerings. In executing the biggest overhaul in its history, Alibaba manages to address two objectives that have eluded many of its rivals — appeasing both a government distrustful of Big Tech and investors traumatized by a yearslong regulatory crackdown.
Its shares soared more than 14% in New York trading, adding about $32 billion to its market value. Rivals, including Tencent Holdings Ltd., also surged in anticipation that Alibaba’s peers might explore similar actions in a loosened regulatory regime.