On Wednesday, January 1st, Chinese e-commerce giant Alibaba announced the sale of the entire equity stake held by its subsidiary in Gaixin Retail, the parent company of Sun Art Retail Group, for approximately HK$13.1 billion (US$1.7 billion).
Alibaba stated in its announcement that it will continue to focus on its core business and enhance shareholder returns.
According to the agreement, Alibaba’s subsidiary and New Retail will sell all the equity stake held in Gaixin Retail to the private equity fund DCP Capital. The stake being sold represents about 78.7% of Gaixin Retail’s issued shares, at a price of HK$1.75 per share.
Alibaba first invested in Gaixin Retail in 2017 and further increased its stake in 2020, making Gaixin Retail a consolidated subsidiary of the Alibaba Group. This sale will result in Alibaba recognizing a shareholder loss of approximately US$1.8 billion.
Gaixin Retail suspended its stock trading in Hong Kong from late September to mid-October last year, citing ongoing negotiations.
Gaixin Retail’s business includes supermarket brands Sun Art and Auchan, which are integrated with several of Alibaba’s platforms, including on-demand delivery service “Ele.me,” fresh food delivery business “Taoxianda,” and Tmall Supermarket.
This sale accelerates Alibaba’s withdrawal from physical retail, a move initiated years ago by former CEO Zhang Yong. Alibaba, once a leader in the Chinese business sector, faced significant competition from rivals such as Pinduoduo and ByteDance, prompting a return to its core online business platform.
Under the leadership of newly appointed CEO Daniel Zhang in November, executive Jiang Fan returned to the core management team and took on the role of CEO of the newly established Alibaba E-commerce Business Group. Under Jiang Fan’s leadership, Alibaba is integrating its domestic and international e-commerce businesses while selling off stakes it deems unnecessary.
Alibaba’s first major divestment of physical business was in December 2024, when it agreed to sell the Intime Department Store business to Yageo Fashion Co., Ltd. for approximately US$1 billion, resulting in an initial investment loss of around US$1.3 billion.
Alibaba’s stock in Hong Kong closed at HK$82.40 on Friday, December 27, and the market was subsequently closed for the holidays for a few days. The stock has fallen more than 70% from its peak at the end of 2020.