Alibaba has agreed to sell its gaming division Lingxi Games to Trustar Capital in a transaction valuing the unit at more than $1.5 billion, according to an internal memo reviewed by Reuters and the Wall Street Journal. The deal is part of the Chinese e-commerce giant's effort to divest non-core assets and redirect capital toward artificial intelligence and cloud computing.
Lingxi Games, which develops and publishes mobile and online games, becomes the latest Alibaba business to be shed as the company narrows its focus. Alibaba previously sold stakes in department store operator Sun Art Retail and luxury retailer Intime to Citic Capital for a combined $2.6 billion. The gamemaker's sale follows a pattern among Chinese tech giants retreating from diversified holdings to concentrate resources on higher-priority segments.
Trustar Capital, formerly known as Citic Capital, is a Beijing-based private equity firm with a track record of investments across Asia. The firm has backed financial services, real estate and technology companies in the region. Trustar's acquisition of Lingxi Games adds gaming assets to a portfolio that has historically favored financial and infrastructure plays.
Alibaba's gaming business has faced headwinds in recent years. China's mobile gaming market grew 5.5 percent in 2024 compared to 8.2 percent in 2023, according to market data firm Newzoo. Regulatory pressure on gaming companies in China, including restrictions on playtime for minors and content requirements, has pressured margins across the sector. Divesting Lingxi Games allows Alibaba to exit gaming and unlock capital for faster-growing businesses.
The transaction aligns with Chief Executive Officer Eddie Wu's strategy, announced in March 2024, to reduce Alibaba's business portfolio and improve profitability. Wu has emphasized investing in cloud infrastructure, large language models and e-commerce technology as priorities for the company. Alibaba has committed to spending on data centers and AI model development, with plans to channel proceeds from asset sales into these initiatives.
Alibaba's asset sales have generated at least $2.6 billion in the past two years, with the Lingxi Games deal adding another $1.5 billion in proceeds. That combined $4.1 billion represents capital the company is directing away from legacy entertainment and retail holdings toward core technology infrastructure.
