Alibaba Group is set to receive more than $2 billion from the sale of its game development unit Lingxi Games to private equity firm Trustar Capital, according to a Reuters report citing a person familiar with the matter. Trustar, formerly known as CITIC Capital, confirmed late Monday that it had reached an agreement with Alibaba to acquire the entire stake in Lingxi.
The news lifted Alibaba's US-listed shares by about 2% at the market open on Monday. The transaction follows several rounds of negotiations, as detailed in an internal memo from Lingxi CEO Zhou Bingshu to employees, which was reviewed by Reuters. The memo confirmed the ownership transfer but did not disclose the exact value or timeline for completion, nor did it mention regulatory approvals or other conditions.
Bloomberg News had earlier reported the deal would be worth at least $1.5 billion. Neither Alibaba nor Lingxi responded to Reuters requests for comment on the memo.
Strategic divestment aligns with Alibaba's focus
The sale is part of Alibaba's ongoing portfolio review, which has seen the company divest businesses considered non-core to its strategic priorities. The tech giant has increasingly concentrated on artificial intelligence and cloud computing, aiming to streamline operations. This transaction follows Alibaba's recent sales of hypermarket operator Sun Art and department-store chain Intime.
Two sources indicated that Alibaba had been seeking a buyer for Lingxi for some time. The divestment fits a broader trend of Chinese tech firms refocusing on core competencies, as seen in Hong Kong's market dynamics ahead of major earnings.
Lingxi's new chapter under Trustar
Lingxi Games, based in Guangzhou, is best known for "Three Kingdoms: Strategy Edition," a multiplayer strategy game developed with Japan's Koei Tecmo Holdings. The company had previously explored external fundraising, but a planned round in late 2023 stalled after China proposed tighter regulations for the online gaming industry. The sector has since recovered from much of that regulatory uncertainty.
Lingxi also underwent a management reshuffle in 2024, with Zhou, who previously led the team behind "Three Kingdoms: Strategy Edition," becoming CEO after founder Zhan Zhonghui left, according to Chinese corporate records. Zhou said the existing management team would continue to run the business after the ownership change, and Trustar indicated it would support current management, suggesting operational continuity.
It remains unclear whether Alibaba will maintain commercial relationships with Lingxi, such as publishing, cloud computing, or technology partnerships. Trustar said its industry resources and operational expertise would support Lingxi's next stage of development.
This deal comes as Alibaba's broader strategy mirrors moves by other tech giants, such as Microsoft's heavy AI investment, highlighting the industry's pivot toward high-growth areas. Investors will be watching whether Alibaba's divestitures continue to unlock value.
This article is for informational purposes only and does not constitute financial advice.
