Alibaba accelerates the withdrawal from activities considered non-strategic and free new resources to be allocated to the big bet onartificial intelligenceThe Chinese group is preparing to sell Lingxi Games, the subsidiary active in the development of video games, to the Asian private equity firm Trustar Capital. Second Reuters, the sale should give Alibaba over 2 billion dollarsThe parties have reached a formal agreement After several rounds of negotiations, Lingxi's CEO announced the decision to employees. Zhou BingshuThe document, however, does not indicate either the final price or the expected completion date of the transaction. Bloomberg, which first reported the news of the agreement, the valuation is around at least $1,5 billion.
Alibaba will transfer thefull participation held in Lingxi. The change in ownership, at least operationally, is not expected to result in immediate disruption. Zhou explained that he and the current management team will continue to lead the company even after the change of control.
Alibaba sells non-core assets and focuses resources on AI
The sale of Lingxi is part of the profound transformation initiated by Alibaba under the guidance of the managing director Eddie WuThe group is reducing its exposure to activities considered peripheral to concentrate capital, investments and managerial capabilities on the two pillars identified for the next phase of growth, artificial intelligence and cloud computing“Alibaba is selling Lingxi to Trustar to better focus on its strategic priorities,” Zhou explained in the memo to employees.
The group had been seeking a buyer for the video game company for some time. Trustar Capital, formerly known as Citic Capital, also prevailed over potential industrial buyers thanks to its operational expertise and presence in the Asian market. According to Zhou, the fund has the resources and experience necessary to guide Lingxi through its next phase of development. The sale is not an isolated case. In recent years, Alibaba has already streamlined its portfolio by divesting other non-core holdings. These include Sun Art Retail Group, large-scale retail operator, and the department store chain IntimateThe deals helped free up billions of dollars as the group redefined its industrial footprint.
The Big $100 Billion Bet on Cloud Computing and Artificial Intelligence
Behind the reorganization is above all the ambition to transform Alibaba into one of the world's leading players in artificial intelligence. The group has indicated the goal of bringing combined revenues related to AI and cloud computing to surpass $100 billion within five yearsTo support this expansion Alibaba has planned investments for 380 billion yuan, about 53 billion dollars, over three years, particularly aimed at the infrastructure required for the development of AI and cloud services.
The company continues in parallel with expand its offering of artificial intelligence modelsIn August, it presented what it called its most advanced model, claiming competitive performance compared to major international developers. The strategy aims to strengthen Alibaba in an increasingly fierce competition between large Chinese technology groups and US laboratories.
The sale of Lingxi therefore shows that the restructuring is not only financial. Alibaba is choosing where to concentrate your resources, sacrificing potentially profitable activities in order to increase investment capacity in sectors it considers crucial for the future.
Lingxi Games: From the Success of Three Kingdoms to the Change of Ownership
Headquartered in Guangzhou, Lingxi Games It is best known for its successful mobile strategy game “Three Kingdoms: Strategy Edition“, developed in collaboration with the Japanese Koei Tecmo Holdings and inspired by the Three Kingdoms era of China. The title, released in 2019, became one of the company's biggest hits. By 2024, the game had spawned over a billion dollars in revenue in the first two years since launch. Lingxi was born from the evolution of Guangzhou Ejoy, founded in 2011 by Zhan Zhonghui after a long experience at NetEase. Alibaba had acquired Ejoy in 2017 based on a valuation of approximately a billion dollars, later transforming it into its current gaming division. The company has undergone a period of transformation in recent years. An attempt to raise external capital in late 2023 stalled after China proposed stricter regulations on the online gaming industry.
With the move to Trustar, a new chapter begins for Lingxi. For Alibaba, however, the sale represents another step in the same direction: fewer peripheral activities and more resources to invest in the race for artificial intelligence and the cloud, the sectors on which the Chinese giant is building its new industrial strategy.
