Alibaba CEO says business units will be more agile

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Alibaba CEO says business units will be more agile

After the separation of the company into separate companies, the tech conglomerate's chief executive Daniel Zhang said on Thursday that the business units will be more agile and eventually list on their own.

Two days after Alibaba announced its largest restructuring in the company's history, it will see it transform into a holding company structure with six business units, each with their own boards and CEOs.

He told investors on a conference call that Alibaba will be more of an asset and capital operator than a business operator.

The business units will have their own CEOs and boards, though Alibaba will retain seats on those boards in the short-term, he said.

After laying the groundwork for the restructuring a number of years ago, Zhang told investors that the business units could pursue public listings on their own in the future.

After these units go public, Alibaba will continue to evaluate the strategic importance of these companies and decide whether or not to retain control, according to Toby Xu, Alibaba CFO.

The changes will go into effect immediately.

When asked about the timelines for the listings, each business unit can pursue independent fundraisings and IPOs as a result of the restructuring.

The market is the litmus test for a company to pursue financing and IPO when they are ready, said Xu.

The group will decide whether or not it wants to keep strategic control of each unit after they go public, Xu said.

The group is planning to monetise non- strategic assets in their portfolio to optimize its capital structure, said Xu.

Some analysts say thatBaiqai is currently undervalued as a standalone conglomerate and that a separation would allow investors to value each business division independently.

The restructuring could help protect the shareholders from regulatory pressures, as penalties on one division in theory would not affect the operations of another, analysts say.