BEIJING, September 12 (TiPost)— Alibaba Group tried to ease concerns about the listing plan of its cloud unit after the surprising management shuffle.
Alibaba will proceed with the spinoff plan for Alibaba Cloud Intelligence Group that previously announced, and appoint a separate management team for the plan, according to a filing with the Hong Kong Stock Exchange. Completion of the proposed spin-off is subject to a number of factors, including but not limited to the successful restructuring of certain assets, liabilities and contracts, implementation of employee equity incentive plans, market conditions, as well as regulatory reviews and approvals in relevant jurisdictions.
The filling said Alibaba has completed the management transition and Eddie Yongming Wu took the role of CEO of Alibaba Cloud Intelligence Group to succeed Daniel Zhang, or, Zhang Yong, just as a recent internal letter Joseph Tsai to employees said. From September 10 on, Tsai serves as Alibaba Group’s Chairman and Eddie Yongming Wu became the new CEO, according to the letter. Tsai said the board of directors accepted the resignation application from Zhang as the company is on the track of a smooth transition, and decided to name Eddie Wu as the acting chairman and CEO of the cloud unit.
The filling, following Tsai’s letter, suggested Alibaba’s cloud arm would stay committed to its initial public offering (IPO) plan despite Dainel Zhang’s abrupt departure. "We think this latest change was not planned back in June and there are concerns of disagreements among Alibaba's partners," said Morningstar analyst Chelsey Tam in a client note. Citi analyst Alicia Yap expected that Zhang's exit could drag on Alibaba stock until a successor is named.
Alibaba announced in late March to split into six business groups, including Taobao Tmall Group, Alibaba International Digital Commerce Group, Local Services Group, Cainiao Smart Logistics Network Limited, Cloud Intelligence Group, Digital Media and Entertainment Group. Five of these major business groups will have the flexibility to raise external capital and potentially to seek its own IPO, with the exception of Taobao & Tmall Group, which will remain wholly-owned by Alibaba Group. Daniel Zhang called the move “the most significant governance overhaul” in Alibaba’s history and said each business group is fully responsible for its performance, with financial independence.
Alibaba said in June that Zhang would step down from both Chairman and CEO to focus on its cloud unit in September, succeeded by the Executive Vice Chairman Joseph Tsai as the Chairman, and Eddie Wu, the Chairman of Taobao and Tmall, as the new CEO.
Prior to Zhang’s quit as chairman and CEO, Alibaba said in May that its board of directors approved a full spin-off of the Cloud Intelligence Group via a stock dividend distribution to shareholders, aiming to complete the breakup in the next 12 months and make the group an independent publicly listed firm. The board also approved, to serve as chairman and CEO of the Cloud Intelligence Group, including cloud, artificial intelligence (AI), DingTalk and other businesses. Alibaba plans to include external strategic investors in the cloud business group through private financings prior to the spinoff.
Listing plans about two other business groups also got the nod from Alibaba’s board. Freshippo (Heman), a grocery stores operator under the China commerce segment, is approved to execute an IPO, and expected to be completed in the next 6 to 12 months. Cainiao Smart Logistics, a group provides supply chain, logistics and delivery services that Alibaba holds a 67% stakes in, is approved to explore an IPO with the target to complete the deal in the next 12 to 18 months.
Alibaba decided to postpone Freshippo’s IPO in Hong Kong due to weak sentiment for consuemer stocks, Bloomberg reported last Friday. Freshippo was reported to be valued at around US$4 billion through the listing, less than half of its initial valuation target of US$10 billion.