Key Highlights
- Alibaba has reached an agreement to divest its gaming division Lingxi Games to Trustar Capital in a transaction valued at more than $2 billion
- CEO Zhou Bingshu confirmed the transaction through a company-wide memo, noting that current leadership will remain post-acquisition
- The divestiture represents Alibaba’s ongoing effort to streamline operations and allocate resources toward artificial intelligence and cloud infrastructure
- The gaming unit’s flagship title is “Three Kingdoms: Strategy Edition,” created in partnership with Japanese developer Koei Tecmo
- Since Q4 2024, Alibaba has divested more than $4.6 billion worth of peripheral business units, including retail chains Sun Art and Intime
Chinese e-commerce behemoth Alibaba Group has finalized an agreement to transfer ownership of its gaming subsidiary Lingxi Games to Asia-based investment firm Trustar Capital for a sum exceeding $2 billion, according to an individual with direct knowledge of the transaction. A separate Bloomberg report valued the deal at a minimum of $1.5 billion, citing different sources.
Shares of Alibaba (BABA) advanced 1.92% following the announcement.
Alibaba Group Holding Limited, BABA
In a Monday communication to Lingxi employees, CEO Zhou Bingshu verified that a definitive agreement had been executed following multiple negotiation sessions. Zhou indicated that both he and the existing leadership structure would continue their roles following the ownership transition.
Trustar Capital, previously operating as CITIC Capital, specializes in private equity investments throughout Asia. Zhou characterized the firm as possessing both the sector knowledge and management capabilities necessary to accelerate Lingxi’s future expansion.
The internal communication omitted specific details regarding transaction value, anticipated completion timeline, or regulatory requirements tied to the deal.
Neither Lingxi, Alibaba, nor Trustar provided responses to Reuters’ inquiries.
Strategic Portfolio Optimization Continues
The Lingxi divestiture aligns with a broader strategic initiative Alibaba has pursued since the final quarter of 2024. The corporation previously divested its ownership positions in Sun Art and Intime for an aggregate $2.6 billion, transactions that Chairman Joe Tsai and CEO Eddie Wu characterized as strategic portfolio rationalization.
According to two individuals familiar with the situation, Alibaba had been discreetly pursuing potential acquirers for Lingxi for an extended period. A capital-raising initiative scheduled for late 2023 encountered obstacles when Chinese authorities introduced stricter gaming industry regulations, one source disclosed.
The gaming unit experienced significant leadership changes throughout 2024. Zhou, who spearheaded development of “Three Kingdoms: Strategy Edition,” assumed the CEO position following founder Zhan Zhonghui’s departure.
Whether Alibaba will maintain any business relationship with Lingxi following the transaction completion, such as cloud infrastructure services or distribution agreements, remains undetermined.
About Lingxi Games
Operating from Guangzhou, Lingxi has achieved prominence primarily through “Three Kingdoms: Strategy Edition,” a multiplayer mobile tactical game developed jointly with Japanese gaming company Koei Tecmo, creator of acclaimed series including “Romance of the Three Kingdoms” and “Nobunaga’s Ambition.”
Alibaba’s divestiture strategy parallels actions taken by ByteDance in recent months, which liquidated its gaming studio Moonton. Both technology companies have substantially increased artificial intelligence investments, with their respective ChatGPT-equivalent platforms emerging as leading AI applications throughout China.
The Lingxi transaction has not yet revealed specific timelines for completion or outlined necessary regulatory clearances.
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