Alibaba transfers stakes in Chinese companies to new vehicle amid restructuring efforts

Alibaba (China) Network Technology has transferred its stakes in seven listed companies to Hangzhou Haoyue Enterprise Management
The move is meant to allow Alibaba (China) Network, established in 1999, to focus on its main businesses, according to filings

Alibaba

Tracy Quin Shanghai

Published: 9:30pm, 4 Dec 2023

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Alibaba (China) Network Technology, a major Alibaba Group Holding subsidiary that serves as a holding vehicle for its equity stakes, has transferred shares in at least seven listed companies to a new local venture, according to Chinese corporate announcements.

All of Alibaba’s holdings in those seven companies – which include Focus Media, an advertisement placement services provider, and YTO Express, a courier company – have been transferred to Hangzhou Haoyue Enterprise Management, a new vehicle created in October with the same ownership structure as Alibaba (China) Network, according to filings by those listed firms.

Under China’s A-shares regulations, companies listed on the mainland must disclose shareholder changes involving stakes of 5 per cent or more.

Alibaba, owner of the South China Morning Post, did not immediately respond to a request for comment.

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The deals come as Alibaba pushes through with a sweeping restructuring to break up its sprawling empire, once envisioned by founder Jack Ma as “the world’s fifth largest economy”.

According to filings by Meinian Onehealth, another of the seven listed companies, the equity transfer was meant to allow Alibaba (China) Network to focus on its main businesses.

The transfers involving YTO Express, as well as home decor and furniture retailer Red Star Macalline Group and cosmetics e-commerce firm Shanghai Lily & Beauty, were announced on Friday.

On Monday, the rest of the seven companies, which include smart transport operation services provider China TransInfo Technology and retail firm Easyhome New Retail Group, also made similar announcements, suggesting that the transfers were a coordinated move by Alibaba.

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Alibaba (China) Network, established in 1999, remains a major shareholder in several other mainland-listed companies, including a 10 per cent stake in travel agency UTour Group.

These companies are considered members of the Alibaba ecosystem, with many having deep business ties with the e-commerce giant.

YTO Express, for example, has been a key delivery service provider for Alibaba’s Taobao online shopping platform.

Some of the transfers are set to book losses on paper. Alibaba (China) Network acquired shares in Meinian Onehealth in late 2019 for 11.55 yuan per share. But the latest filing showed the shares would be transferred to Hangzhou Haoyue at 6.17 yuan per share.

New York and Hong Kong-listed Alibaba has lost three-quarters of its market value in the past three years.

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It surprised investors last month by announcing that it would no longer proceed with a full spin-off of its cloud computing unit, citing tightened US export restrictions on advanced chips, walking back an initial public offering plan announced just months earlier.

That revelation came hours after regulatory filings in the US showed that the family trust of Alibaba founder Ma was planning to offload US$870 million worth of the company’s shares.

Ma’s office later clarified that the divestment had not taken place because Alibaba’s stock price has fallen way below its “fair value”.