Alibaba Approves Cloud Spinoff, Prepares Grocery, Logistics Arms to Go Public

The Chinese e-commerce giant is kickstarting a restructuring in hopes of spurring growth.

The logo of Chinese technology firm Alibaba at its office in Beijing, Aug. 10, 2021.
The logo of Chinese technology firm Alibaba at its office in Beijing, Aug. 10, 2021.
AP Photo/Mark Schiefelbein, File

HONG KONG (AP) — Alibaba plans to spin-off of its cloud computing business and said Thursday that its logistics and grocery units will explore initial public offerings as the Chinese e-commerce company kickstarts a restructuring of its operations in hopes of spurring growth.

The company in March announced plans to reshape itself into six business divisions with plans to allow all but its core e-commerce business to raise external capital and go public.

In an earnings call Thursday, Alibaba CEO Daniel Zhang said that the Alibaba plans to fully spin off its cloud computing unit and complete a public listing in the next 12 months, allowing it to "optimize operations," Zhang said.

Alibaba's board of directors approved the full spin-off of the cloud computing unit via a stock dividend distribution to shareholders, the company said.

Zhang also said that Freshippo, its groceries arm, as well as logistics arm Cainiao, are "ready to go public."

Alibaba's board has approved plans to begin Freshippo's IPO process and Cainiao will explore an IPO in the next 12 to 18 months, he said.

Other units such as Alibaba's international digital commerce group, which operates Singapore-based e-commerce platform Lazada, will also explore raising external capital as it seeks to expand globally.

Alibaba Group Holding on Thursday posted a lower-than-expected 2% rise in revenue for the quarter ended March, suggesting that spending has been slow to bounce back in China since the removal of COVID-19 restrictions amid slowing economic growth.

The company reported revenues of 208.2 billion yuan ($29.6 billion) for its March quarter. It also reversed losses from the same quarter last year, posting a net income of 23.5 billion yuan ($3.3 billion) due to one-off gains from its equity investments.

Revenue from its China commerce business — Alibaba's largest business unit by revenue — declined 3% compared with the same period last year. Its cloud computing unit also declined 2% in revenue.

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