Restructuring for Agility and Responsiveness
On Thursday, Alibaba Group CEO Daniel Zhang stated that the company's restructuring would enable its business units to be more agile and improve their ability to make faster decisions and respond to market shifts.
Transitioning to Asset and Capital Operator
Over the past few years, Alibaba (NYSE: BABA) has been preparing for this restructuring, according to Zhang. He mentioned that the company, founded by Jack Ma, will operate more as an asset and capital manager than a business operator.
Largest Restructuring in Company History
On Tuesday, Alibaba announced its most significant restructuring, which involves transforming into a holding company with six business units. Each unit will have its board and CEO.
Potential for Individual IPOs
This restructuring also allows each business unit to raise funds through their initial public offerings (IPOs).
Independent Fundraisings and IPOs
When asked about market listing timelines, Alibaba CFO Toby Xu said that the restructuring allows each business unit to pursue independent fundraisings and IPOs when they are prepared.
Addressing Undervaluation and Independent Valuation
Analysts suggest that Alibaba is currently undervalued as a standalone conglomerate. The restructuring could enable investors to independently value each business division.
Protection from Regulatory Pressures
The restructuring might also offer better protection for Alibaba shareholders from regulatory pressures. In theory, penalties imposed on one division would not impact the operations of other divisions, according to analysts.