Alibaba Group is expected to receive more than $2 billion from the sale of its game development unit Lingxi Games to private equity firm Trustar Capital, Reuters reported, citing a person familiar with the matter.
Trustar said late on Monday that it had reached an agreement with Alibaba to acquire the Chinese technology giant’s entire stake in Lingxi.
Alibaba’s US-listed shares rose about 2% at market open on Monday following news of the transaction.
The deal followed several rounds of negotiations between Alibaba and Trustar, according to an internal memo sent to Lingxi employees by CEO Zhou Bingshu and reviewed by Reuters.
Under the agreement, Alibaba will transfer all of its ownership in the gaming company to Trustar.
The memo did not disclose the transaction value or provide a timeline for its completion.
Details about regulatory approvals and other conditions were also not disclosed by either company.
Bloomberg News had previously reported that the deal would be worth at least $1.5 billion.
Neither Alibaba nor Lingxi responded to Reuters requests for comment on the memo.
Sale fits Alibaba’s asset strategy
The divestment comes as Alibaba continues to review its portfolio and dispose of businesses considered outside its core strategic priorities.
The company has increasingly focused its resources on artificial intelligence and cloud computing while seeking to streamline its broader operations.
The Lingxi transaction follows Alibaba’s recent sales of hypermarket operator Sun Art and department-store chain Intime.
Two people familiar with the matter said Alibaba had been seeking a buyer for Lingxi for some time.
Zhou said Lingxi’s existing management team would continue to run the business after the ownership change.
Trustar also said it would support the company’s current management, suggesting that the transaction is intended to provide operational continuity.
It remains unclear whether Alibaba will maintain commercial relationships with Lingxi after the sale, including through publishing, cloud computing, or technology partnerships.
Lingxi enters new phase
Based in Guangzhou, Lingxi Games is best known for “Three Kingdoms: Strategy Edition”, a multiplayer strategy game based on China’s Three Kingdoms era.
The title was developed in collaboration with Japan’s Koei Tecmo Holdings, whose franchises include “Romance of the Three Kingdoms” and “Nobunaga’s Ambition”.
The sale follows a period of change for Lingxi.
The company had previously explored external fundraising, but a planned fundraising process in late 2023 stalled after China proposed tighter regulations for the online gaming industry.
The gaming sector has since recovered from much of the regulatory uncertainty that weighed on the industry.
Lingxi also underwent a management reshuffle in 2024. Zhou, who previously led the team behind “Three Kingdoms: Strategy Edition”, became CEO after founder Zhan Zhonghui left the company, according to Chinese corporate records.
Trustar, formerly known as CITIC Capital, said its industry resources and operational expertise would support Lingxi’s next stage of development.
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