According to the firm, five of six units that were created as a result of the move will be exploring raising new funding and IPO options.
Alibaba shares rose more than 14% in New York Tuesday, and were 13% higher in Hong Kong Wednesday.
The US-listed shares of the company have dropped by nearly 70% since 2020 due to concerns about Beijing’s crackdown in the tech sector.
This is a result of reports that Alibaba founder Jack Ma, who was absent for a while, has resurfaced in China.
Alibaba stated that the company’s decision to separate the business was its largest restructuring in its 24-year history.
Each unit will have its own chief executives and boards. They will have the right to raise capital and apply for stock market listings. The exception is Taobao Tmall Commerce Group which will remain wholly owned.
Alibaba stated in filings to The US Securities and Exchange Commission and Hong Kong Stock Exchange that the units would “capture opportunities within their respective markets and industry, thus unlocking the value Alibaba Group’s respective businesses.”
Chief executive Daniel Zhang wrote to employees, “The market is the best test and every business group can pursue independent crowdfunding and IPOs when it is ready.”
Rui Ma, a China technology analyst, told BBC that the restructuring was a good investment because Alibaba’s business units can grow at their own pace.
She also stated that each unit would be more efficient and less likely to be subjected to antitrust violations.
According to Scott Kessler (global sector lead for technology media and telecommunications at Third Bridge), Alibaba’s restructuring follows years of strict regulation for Chinese technology companies.
“The government has been more friendly to large technology companies over the last few months.” Many people are asking if this could signal a shift in government’s attitude towards technology companies to support them, he said.
According to an article in the Alibaba-owned South China Morning Post newspaper, Mr Ma, who founded Alibaba , recently returned to China, having spent more than a year abroad.
According to the newspaper, he met with staff and toured the classrooms of the Yungu School, Hangzhou, where Alibaba’s headquarters is located.
In the midst of a crackdown against technology entrepreneurs, Mr Ma was the most prominent Chinese billionaire to vanish.
Since 2020’s criticism of China’s financial regulators, the 58-year old has kept a low profile. In September 2019, he resigned as chairman of Alibaba.