Alibaba Considers US IPO for eCommerce Unit Amid Company Restructuring

Alibaba is reportedly contemplating a US initial public offering (IPO) for its eCommerce unit, according to unnamed sources cited by Bloomberg. The Chinese tech giant is said to be in the early stages of considering the listing, which could potentially occur next year. However, the size of the IPO remains undetermined. When asked for comment, Alibaba stated, “Currently, there is no IPO plan.”

This news follows Alibaba’s recent announcement that it would divide itself into six separate entities, allowing some of the new businesses to go public. CEO Daniel Zhang explained in a letter to Alibaba employees in March that the restructuring aims to make the organization more agile, shorten decision-making links, and respond faster. Five of the six groups will have their own CEOs and boards, the ability to raise outside funds, and pursue IPOs.

The restructuring could signify a shift within China’s tech industry, as the country has spent the past two years cracking down on its tech giants. New regulations have been introduced to limit their power, including rules on monopolization and investment, and restrictions on how companies can use algorithms for online recommendations. China has also put IPOs on hold, including the highly anticipated IPO of Ant Group, an Alibaba affiliate.

Restructuring Alibaba into smaller, siloed operations may alleviate regulators’ concerns about market data dominance, as smaller firms have less power in their respective markets in terms of pricing power. However, restructuring a corporate giant takes time, effort, and money, potentially leaving companies vulnerable to competitors.

This news comes as semiconductor designer Arm, a subsidiary of SoftBank Group, announced its plans for an IPO after filing paperwork with the Securities and Exchange Commission (SEC). These deals are emerging during a lukewarm period for public listings, with traditional IPOs raising only $2.3 billion in the first few months of the year, marking the worst start since 2009.