Alibaba restructuring will help make company ‘more agile’ and enhance decision-making, CEO says

Alibaba Group’s recently announced restructuring will allow all its business units to become more agile and enhance faster decision-making and how the firm responds to market changes, said the company’s chief executive Daniel Zhang said on Thursday.

While on a conference call, Zhang said that Alibaba had begun laying the groundwork for the restructuring over the past few years. He added that in the future, the Jack Ma-founded tech conglomerate will be more in the structure of an asset and capital operator, rather than a business operator.

Watch | Chinese tech giant Alibaba’s shares jump 14%

Two days ago, Alibaba declared its most extensive reorganisation to date, transforming itself into a holding company with six individual business units, each having its own board and CEO. The day-to-day operations of the six individual business units will be ceded to their respective new management bodies.

Zhang will, however, continue to serve as Alibaba’s CEO.

Referring to the plan as a “transformation”, Zhang had earlier said that it would make Alibaba “more agile, enhance decision-making, and enable faster responses to market changes”.

The restructuring reportedly opens up each of the Chinese tech giant’s new individual units to the possibility of raising funds through their own initial public offering (IPO).

On the call, when asked about the timeline for the market listings, Toby Xu, Alibaba’s Chief Financial Officer, stated that the restructuring allowed each business unit to look for independent fundraising and IPOs whenever they are prepared.

Some analysts believe that the current value of Alibaba does not account for the value of each division on its own and that a breakup could result in a more accurate assessment of each division’s worth. They also argue that restructuring could also provide better protection for Alibaba shareholders from the demands of regulators, since a penalty imposed on one sector would not influence the activities of another.

(With inputs from agencies)

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