Alibaba Group Holding Ltd, on Tuesday, announced its decision to split the company into six different vertices with a separate CEO and board of directors.
The six units will be: Global Digital Commerce Group, Taobao Tmall Commerce Group, Cloud Intelligence Group, Local Services Group, Digital Media and Entertainment Group, and Cainiao Smart Logistics Group.
Each of these vertices will also consider raising funds via initial public offering route, say media reports.
Alibaba Group will reportedly follow a holding company management model with Daniel Zhang continuing to remain as the CEO and chairman of the holding company. He will also serve as CEO of Cloud Intelligence Group.
According to analysts, the move will help the vertices to create separate brand images or narratives.
The move could inject an element of flexibility and adaptability into the company, Reuters quoted an analyst as saying. "...it will allow the more successful of the six new companies to potentially raise finance more easily and cheaply than the parent company can, as they will not be burdened by the
slower, less profitable parts of the business. So for investors, they get the opportunity to put their funds in the parts they like whilst avoiding the parts they do not, unlike the current situation," David Blennerhassett, analyst at Ballingal Investment Advisors told Reuters.
The reports of restructuring the company come even as the founder of the e-commerce giant Jack Ma returned to China on Monday. He has been keeping a low profile since November 2020, only surfacing in rare public appearances, after he publicly criticised the Xi Jinping government during a speech in Shanghai.