Alibaba Group Holding Ltd (阿里巴巴) agreed to sell its shares in Sun Art Retail Group Ltd (高鑫零售) to private equity firm DCP Capital (德弘資本), unloading another high-profile physical commerce asset to focus on its core online business.
China’s e-commerce pioneer said it could receive gross proceeds of up to HK$12.3 billion (US$1.6 billion) from selling its more than 70 percent holding in the chain of Costco-like hypermart stores. That’s significantly less than the US$3.6 billion Alibaba paid just to double its stake in Sun Art in 2020. Sun Art is today worth around US$3 billion overall, despite growing its market value more than 80 percent in the past 12 months.
The sale accelerates Alibaba’s retreat from physical retail, an initiative spearheaded years ago by previous CEO Daniel Zhang (張勇). Once a dominant player across Chinese commerce, intensifying competition from PDD Holdings Inc (拼多多) and ByteDance Ltd (字節跳動) have forced Alibaba back to its roots as an online commerce platform.
Photo: Bloomberg
Under new chief Eddie Wu (吳泳銘), Alibaba is focusing investment on areas it considers more promising, from the cloud to online marketplaces. It’s also ramping up abroad, for instance by creating a joint venture to speed up a South Korean expansion. Alibaba is now integrating its domestic and international e-commerce operations under the leadership of fast-rising executive Jiang Fan (江帆), while steadily selling off holdings it doesn’t consider essential.
The latest deal “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 yesterday.
Just last month, Alibaba agreed to sell its Intime department store (銀泰百貨) business to Youngor Fashion Co (雅戈爾) for around US$1 billion, incurring a loss of about 9.3 billion yuan (US$1.3 billion) on its initial investment.
Electronics retailer Suning.com Co (蘇寧易購) was another of several major brick-and-mortar acquisitions that Zhang orchestrated.
Sun Art runs hundreds of hypermarkets across China under brands including RT-Mart (大潤發). It also has a distribution and storage network that supplement Alibaba’s own efforts in fresh produce.
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