Alibaba Group is expected to reap more than $2 billion from the sale of its game developer unit Lingxi Games to private equity firm Trustar Capital, a person familiar with the matter told Reuters on Monday. Alibaba shares rose on the news.

The deal would hand Lingxi Games — the mobile-games arm Alibaba formed in 2020 from its existing gaming operations — to Trustar, a buyout firm formerly known as CITIC Capital, according to the reports. Lingxi Games is behind several popular mobile titles in China, including long-running hits in the strategy and role-playing genres.

The divestment is the latest in a series of steps by Alibaba to streamline its sprawling portfolio. Under CEO Eddie Wu, the company has shed or scaled back non-core businesses — from offline retail assets to parts of its entertainment operations — while doubling down on two priorities: artificial intelligence and cloud computing. Alibaba has poured resources into its Tongyi Qianwen (Qwen) AI model family, which last week crossed 3 billion downloads to become the world's most-downloaded open-source model family, and into its cloud unit, which has been a key beneficiary of China's AI boom.

Selling Lingxi also comes as China's gaming industry faces a shifting regulatory landscape, making game assets less central to Alibaba's strategy than the AI infrastructure it is racing to build.

Sources