Alibaba's Restructuring Pays Off: Cloud And Cainiao Divisions Attract Investor Attention With High Post-Restructuring Valuations

  • Investors said the Alibaba Group Holding Limited BABA division's shares waiting for public listing would likely be in high demand as the breakup unlocks value in the wake of regulatory crackdown.
  • In March, Alibaba shared plans to split its $220 billion empire into six business units.
  • Interest in the units will likely draw high demand despite the slump in shares of Chinese tech firms like DiDi Global Inc DIDIY and Kuaishou Technology KSHTY KUASF, given the timing and the difference in their assets, Bloomberg cites investors.
  • Also Read: ChatGPT Rivalry Gets Bigger: Alibaba Plans to Integrate Chatbot Across Products at Low Cost
  • Industry specialists expect the spin-offs from proven companies with compelling track records to attract high demand akin to JD LogisticsJD Health, and Ant Group
  • They also saw the split unlocking value by offering greater flexibility to focus on the individual businesses and offer freedom to the talents to explore their potential under the new structure. The breakup signaled ease in the sweeping regulatory crackdown, per the experts.
  • The experts included Ben Harburg, managing partner at Magic Stone Alternative Investment Ltd in Beijing, Jason Hsu, chief investment officer at Rayliant Global Advisors Ltd, Phillip Wool, a managing director at Rayliant, and Sandy Mehta, chief investment at Value Investment Principals Ltd.
  • Alibaba's Cainiao logistics unit could be worth $20 billion, said Wool. Cloud's valuation could be in the order of $50 billion but came with higher regulatory risks and a slowdown in cloud spending, he added.
  • Experts expect interest in the units' shares likely coming from long-only and hedge funds and arbitrage-type investors, acting as a catalyst for the group.
  • Price Action: BABA shares traded lower by 1.24% at $98.52 premarket on the last check Wednesday.
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