Alibaba Group Holding Ltd announced on Wednesday that it has agreed to sell its majority stake in Sun Art Retail Group, a hypermarket chain, to Chinese private equity firm DCP Capital for HK$12.298 billion ($1.58 billion).
The 78.7% stake, held through Alibaba’s subsidiaries, was disclosed in a filing with the Hong Kong Stock Exchange.
Alibaba acquired a controlling stake in Sun Art in 2020 for $3.6 billion, aiming to integrate its digital expertise with Sun Art’s extensive network of hypermarkets across China.
The decision to sell comes after Sun Art’s stock surged 85% over the past year, significantly outperforming the roughly 20% increase in the Hang Seng Index.
Once a dominant force in Chinese commerce, Alibaba has been pushed to refocus on its core online commerce operations due to growing competition from PDD Holdings Inc. and ByteDance Ltd.
Under its new CEO, Eddie Wu, Alibaba is channeling investments into high-potential areas such as cloud computing and online marketplaces. The company is also expanding internationally, including forming a joint venture to accelerate its growth in South Korea.
Last month, the company agreed to sell its Intime department store business to Youngor Fashion Co. for approximately $1 billion, resulting in a loss of about 9.3 billion yuan ($1.3 billion) from its initial investment. Bloomberg Intelligence estimates that Alibaba’s physical retail business losses total around $3 billion.
“The sale is considered to be a good opportunity for Alibaba Group to monetize its non-core assets and to utilize such proceeds to better focus on the development of its core businesses and enhance its shareholder return,” the company said in a statement Wednesday.
In addition, Alibaba is divesting its Chinese department store business, Intime, even though the sale might result in a financial loss.
These moves are part of Alibaba’s broader strategy to reorganize its business portfolio and prioritize its core e-commerce operations.
