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Chinese e-commerce and technology giant Alibaba has agreed to sell its video game development unit Lingshi Games to Asia-focused private equity firm Trustar Capital for more than $2 billion, according to people familiar with the deal.
The two companies have signed a formal agreement under which Trustar will acquire 100% of Lingshi Games, Reuters reported.
The exact value and completion timeline of the transaction have not been disclosed. Bloomberg separately reported that the deal is worth at least $1.5 billion.
In an internal memo to employees, Lingshi Games CEO Zhou Bingshu said the company’s existing management team would continue to run the studio after the ownership change.
Alibaba shifts focus to AI, cloud
The sale is part of Alibaba’s broader strategy to streamline its business and focus on its core operations.
The company has been selling non-core assets as it increases investment in artificial intelligence and cloud computing.
Alibaba previously sold its ownership of hypermarket operator Sun Art and department store chain Intime as part of the restructuring.
Lingshi eyes new growth
Guangzhou-based Lingshi Games is best known for its strategy game Three Kingdoms: Strategy Edition, developed in collaboration with Japanese game maker Koei Tecmo.
The company’s earlier fundraising plans were stalled in 2023 amid tighter Chinese government controls on the gaming industry.
With Trustar Capital taking over the studio, Lingshi’s management expects the company to gain greater scope to expand its business and develop new opportunities in the gaming market.