Alibaba to Sell Lingxi Games for More Than $1.5 Billion as It Refocuses on AI
Alibaba Group is moving to exit the gaming business through the sale of its Lingxi Games subsidiary to Asian private-equity firm Trustar Capital in a deal valued at more than $1.5 billion, as the Chinese technology giant reshapes its portfolio and directs more resources toward artificial intelligence, cloud computing and e-commerce.
Lingxi Games CEO Zhou Bingshu confirmed the agreement in an internal memo to employees, saying Alibaba would transfer its entire stake in the gaming unit to Trustar Capital while the company’s existing management and operations would continue following the transaction.
The memo did not disclose the final value of the deal or when it is expected to close.
Lingxi Games Deal Valuation Rises
The transaction comes months after reports that Alibaba was seeking a buyer for its gaming business.
Reports in June valued Lingxi Games at between 7 billion yuan and 9 billion yuan, equivalent to roughly $1 billion to $1.3 billion, as Alibaba was said to have approached several potential buyers.
More recent developments have pushed the expected value above $1.5 billion, according to Bloomberg as cited in recent reports. Reuters, meanwhile, reported that a person familiar with the transaction estimated its value at more than $2 billion.
The final transaction value therefore remains subject to completion of the deal and an official disclosure.
Trustar Capital to Acquire Alibaba’s Entire Stake
Under the agreement, Trustar Capital will acquire Alibaba’s entire stake in Lingxi Games, one of the group’s key assets in the gaming sector.
Lingxi is expected to continue operating under its new ownership, with its current leadership remaining in place. Trustar will seek to support the company’s growth after its departure from Alibaba’s portfolio.
The sale follows a period of management changes and an internal restructuring of Lingxi’s position within Alibaba.
Three Kingdoms: Strategy Edition Leads Lingxi’s Portfolio
Lingxi Games’ flagship title is Three Kingdoms: Strategy Edition, which was developed in partnership with Koei Tecmo Holdings.
The game has achieved significant reach, with its global user base exceeding 100 million, according to previously reported company performance data.
Its success helped make Lingxi an important asset within Alibaba’s gaming operations before the group began reassessing the role of the business as part of its broader strategy.
Alibaba Reshapes Its Investment Portfolio
The Lingxi transaction is part of a broader effort by Alibaba to reorganize its portfolio.
In recent years, the group has moved to exit certain investments and assets that are less directly aligned with its core priorities, while directing greater resources toward artificial intelligence, e-commerce and cloud computing.
Alibaba’s financial reporting has classified Lingxi Games within its All Others segment alongside several other businesses, rather than among the group’s core operating pillars.
The sale therefore reflects Alibaba’s effort to reduce non-core activities and free up capital for areas it considers to offer stronger growth opportunities.
AI Moves to the Top of Alibaba’s Priorities
The Lingxi divestment comes as Alibaba steps up its investments in artificial intelligence.
The group launched its largest AI model to date this month, marking another step in a strategy aimed at strengthening its position in the advanced-model market and competing with major technology companies in China and the United States.
AI is also becoming increasingly central to the strategy of Alibaba Cloud, making the allocation of capital and human resources toward the sector more important for the group.
Gaming Exit Reflects a Broader Shift
The sale of Lingxi also highlights a broader trend among Chinese technology companies reassessing businesses that are no longer directly tied to their emerging growth priorities.
Recent reports and data indicate that major technology companies have begun scaling back some gaming investments or reconsidering the role of gaming as AI, computing and digital infrastructure gain greater importance in corporate investment strategies.
For Alibaba, the transaction forms part of a broader capital-management effort focused on businesses that can generate greater synergies with its e-commerce, cloud and AI ecosystem.
From Gaming to Artificial Intelligence
The Lingxi deal highlights a clear shift in Alibaba’s strategic priorities.
After building a significant gaming operation, the group is now moving to exit the business while placing artificial intelligence at the center of its future investments.
The sale does not necessarily indicate that gaming has lost its appeal, particularly given Lingxi’s successful titles and large user base. Instead, it reflects a change in the strategic priorities of its owner.
For Trustar Capital, meanwhile, the transaction offers an opportunity to acquire a business with established gaming assets, well-known titles and a large user base, while pursuing growth outside Alibaba’s strategic framework.
Capital Reallocation at Alibaba
At its core, the transaction represents a reallocation of capital within one of China’s largest technology companies.
Rather than continuing to direct resources toward gaming, Alibaba will have greater scope to concentrate capital and management attention on artificial intelligence, cloud computing and e-commerce.
The shift comes as competition in AI intensifies and major technology companies face substantial investment requirements for model development, infrastructure and data centers.
Lingxi is therefore moving from a strategic asset within Alibaba to an independent investment under Trustar Capital, while Alibaba redirects its focus toward sectors it considers more closely tied to the future of its business.