Alibaba Group said on Thursday it will look to monetise non-core assets and consider giving up control of some businesses, as the Chinese tech conglomerate reinvents itself after a regulatory crackdown that wiped 70 percent off its shares.

Group CEO Daniel Zhang said the company’s breakup into separate businesses will allow its units to become more agile and eventually launch their own initial public offerings.

His comments come two days after Alibaba announced the largest restructuring in the company’s history, which will see it change into a holding company structure with six business units, each with their own boards and CEOs.

“Alibaba will be more of the nature of an asset and capital operator than a business operator, in relation to the business group companies,” Zhang told investors on a conference call on Thursday.

On the same call, Alibaba CFO Toby Xu said the group would “continue to evaluate the strategic importance of these companies” and “decide whether or not to continue to retain control.”

Alibaba’s indication that it could divest from assets and sell control of business units after they go public comes more than two years after Beijing launched a sweeping crackdown on its tech giants, targeting monopolistic practices, data security protection and other issues.

While the new business units will have their own CEOs and boards, Alibaba will retain seats on those boards in the short-term, Zhang added.

The group’s Hong Kong-listed shares opened 2.7 percent higher after the investor call and following a 12 percent jump on Wednesday. Gains narrowed to 2.0 percent by afternoon trade.

Matter of Survival

Alibaba began laying the groundwork for the restructuring a few years ago, Zhang said.

As a result of the restructuring, each business unit can pursue independent fundraising and IPOs when they’re ready, Xu said, when asked about the timeline for the listings. The changes will come into effect immediately.

“We believe the market is the litmus test so each company can pursue financing and IPO as and when they are ready,” said Xu.

Alibaba, however, will decide whether the group wants to keep strategic control of each unit after they go public.

Meanwhile, the group is also planning to continue to monetise non-strategic assets in its portfolio to optimise its capital structure, said Xu.

Alibaba’s major rival Tencent has in the past year divested from a number of portfolio companies including selling a $3 billion stake in SEA, transferring $16.4 billion worth of JD.com shares and $20 billion worth of Meituan shares to shareholders.

For its part, Alibaba has made or announced 18 divestments since 2020, Refinitiv data showed.

Alibaba’s reorganisation will not change its share repurchase plan, Xu added on the call. Alibaba implemented a $6 billion share buyback program in 2018, which had expanded to $40 billion by late 2022.

Qi Wang, CEO of China-focused asset manager MegaTrust Investment, said the sector’s strategic move to reorganise was about survival.

“These internet firms are not going to just sit there and let regulation erode away their growth and profits,” Wang said. “Companies including Tencent, Alibaba, JD, Didi and ByteDance have been making bottom-up changes to mitigate the regulatory risk, cost cutting (layoffs), improving operating efficiency, divesting non-core businesses.”

Alibaba, once valued at more than $800 billion, has seen its market valuation decline to $260 billion since Beijing started the crackdown on its sprawling tech sector in late 2020.

Some analysts say Alibaba is currently undervalued as a standalone conglomerate and that a breakup would allow investors to value each business division independently.

The restructuring could also better protect Alibaba shareholders from regulatory pressures, as penalties levied on one division in theory would not affect the operations of another.

Ratings agencies S&P and Moody’s said this week Alibaba’s restructuring was credit positive.

However, S&P said it was not yet known how existing resources would be divvied up or how the group would support businesses with significant cash needs.

By Josh Horwitz, Julie Zhu, Kane Wu and Sumeet Chatterjee; Editor: Sam Holmes

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Inside Alibaba’s Restructuring Plan

Alibaba Group is planning to split into six units and explore fundraising or listings for most of them, it said, in a major revamp as China vows to ease a sweeping regulatory crackdown and support its private enterprises.