Alibaba Group is selling its gaming arm Lingxi Games to Asian private equity firm Trustar Capital in a transaction worth at least $1.5 billion, as the Chinese technology group continues to concentrate resources on artificial intelligence and cloud computing.
Trustar has reached an agreement to acquire Lingxi, according to an internal memo distributed Monday and reviewed by Bloomberg News. Lingxi CEO Zhou Bingshu said Alibaba was transferring the business to Trustar to sharpen its focus on strategic priorities, without disclosing the transaction value.
Zhou and the existing management team are expected to remain in place following the transaction. Reuters separately reported, citing a source familiar with the matter, that Alibaba could ultimately receive more than $2 billion from the sale.
Alibaba Sharpens Focus on AI and Cloud
The sale comes as Alibaba directs a growing share of its resources toward artificial intelligence and cloud computing, two areas that have become central to the company’s longer-term strategy.
Alibaba has been increasing investment in AI infrastructure, models and cloud services as competition intensifies among Chinese and global technology companies for computing capacity and enterprise AI demand.
The divestment of Lingxi provides another indication of how the group is reassessing its portfolio as capital requirements associated with AI infrastructure continue to increase.
Rather than expanding equally across its collection of technology and digital businesses, Alibaba has been placing greater strategic emphasis on operations that can support its position in AI and cloud computing.
Trustar Adds a Chinese Gaming Business
For Trustar Capital, the acquisition provides control of an established business operating in China’s gaming industry.
Lingxi Games develops and publishes mobile games and has operated within Alibaba’s broader digital entertainment portfolio. Retaining Zhou and the existing management team could allow the company to maintain operational continuity as it transitions from Alibaba ownership to private equity control.
Trustar is an Asia-focused private equity firm with investments across multiple industries. The acquisition would add gaming and digital entertainment exposure to its portfolio at a time when private equity firms continue to pursue carve-outs and non-core assets from large corporations.
Divestment Reflects Alibaba’s Changing Capital Priorities
The transaction comes during a period in which artificial intelligence is reshaping capital allocation across the global technology industry.
Developing large AI models and supporting cloud platforms requires substantial investment in GPUs, data centers, networking, power infrastructure and software. Major technology companies have consequently increased capital expenditures while reviewing businesses that sit outside their highest-priority areas.
For Alibaba, AI has become increasingly connected with the future of its cloud business and broader technology platform.
The Lingxi transaction would allow the company to monetize a gaming asset while further concentrating management attention and capital on those strategic priorities.
The sale also illustrates a broader shift across the technology sector as companies evaluate whether businesses accumulated during previous periods of expansion remain aligned with the capital-intensive AI investment cycle now underway.
The transaction remains subject to completion, and Alibaba has not publicly disclosed the final consideration.
