Alibaba is selling its gaming subsidiary Lingxi Interactive to CITIC Capital, reportedly for over $1.5 billion. This move is part of Alibaba's strategy to focus on AI and AGI by divesting non-core assets. Lingxi's CEO Zhou Bingshu confirmed the deal in an internal letter, and the existing management team will continue to operate the company.
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Alibaba is selling its gaming business Lingxi Games to Trustar Capital, with rumors of a deal exceeding $1.5 billion. This is not just a divestiture but a microcosm of big tech focusing on core strategy in the AI arms race.
On August 17, Lingxi Games CEO Zhou Bingshu issued an internal letter confirming that Alibaba will transfer its shares in Lingxi Games, with Trustar Capital becoming the new shareholder. The letter stated that the transaction was reached in a friendly atmosphere and that the management team will continue to operate.
Market rumors suggest the deal is worth over $1.5 billion (approximately 10.1 billion RMB), but neither Alibaba Group nor Lingxi Games has confirmed this. Trustar Capital is a private equity firm under CITIC Capital, focusing on control buyouts, managing $10.5 billion in capital.
Lingxi Games' history can be traced back to UC Jiuyou, acquired by Alibaba in 2014. It was renamed Alibaba Games in 2016, established as a game business group in 2017, and upgraded to the Lingxi Games brand in 2020. Its flagship product 'Three Kingdoms: Strategic Edition' launched in 2019 and became a cash cow, driving the gaming business to independence.
However, subsequent releases like 'Three Kingdoms: Fantasy Land' and 'Asuka' failed to replicate that success, leaving the company heavily dependent on a single game genre. This dependence affects valuation in investors' eyes, especially in the competitive Chinese mobile gaming market.
In the past two years, Alibaba Group has fully focused its strategy on AI, and the gaming business has weak synergy with AI, making divestiture inevitable. AI and cloud infrastructure construction require massive capital, and selling quality assets can provide funds and focus.
Although Lingxi Games is a quality asset, Alibaba chose to sell it, reflecting the priority of big tech in the AI arms race. The internal letter mentioned that Alibaba, based on its strategic focus, is handing Lingxi over to Trustar Capital.
Alibaba is not alone. In March this year, ByteDance reached an agreement with Savvy Games Group, under Saudi Arabia's sovereign wealth fund PIF, to sell all shares of Moonton Technology, with rumors of over $6 billion (approximately 41.3 billion RMB).
These cases show that big tech is cashing in non-core assets to reserve funds for the long-term AGI war. Although gaming businesses can generate cash, they become expendable pawns under the AI strategy.
The deal confirmation comes from Lingxi Games CEO's internal letter, a primary source; the deal amount and bidding parties are market rumors, not officially confirmed, and are marked as source_claim. The information about ByteDance selling Moonton Technology comes from internal letter reports, and the amount is also rumored.
Alibaba's sale of Lingxi Games is an inevitable choice for strategic focus on AI, reflecting the trend of big tech divesting non-core businesses in the AI race. Although the deal amount is unconfirmed, the industry direction is clear.
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