Alibaba Group Holding Ltd. has agreed to sell its more than 70% stake in Sun Art Retail Group Ltd. to private equity firm DCP Capital for up to HK$12.
3 billion ( S $2.16 billion) to focus on its core online business. In 2020, Alibaba paid US$3.
6 billion (S$4.92 billion) to increase its stake in Sun Art, which operates hypermarkets similar to Costco across China. However, according to The Edge Singapore, the sale price of HK$12.
3 billion ( S $2.16 billion) is significantly lower than what the company paid and much less than Sun Art’s current market value of around US$3 billion (S$4.10 billion).
On Tuesday, Sun Art’s stock dropped by as much as 35% in early trading in Hong Kong, while Alibaba’s shares fell by over 1%. This sale speeds up Alibaba’s exit from physical retail, a major initiative once led by former CEO Daniel Zhang. Under the leadership of rising executive Jiang Fan, the company is now focusing on integrating its domestic and international e-commerce operations and selling off assets it deems non-essential.
Alibaba is willing to accept significant losses from past investments as it raises funds to reinvest in key areas like AI and cloud computing. Now, under new CEO Eddie Wu, Alibaba is focusing its resources on areas such as online marketplaces, cloud computing, artificial intelligence (AI), as well as expanding internationally. Just last month, Alibaba sold its Intime department store business to Youngor Fashion Co.
for around US$1 billion (S$1.37 billion.
