Alibaba To Sell Lingxi Games, Deal Likely To Fetch Over $2 Bn

Alibaba Group is set to sell its gaming unit Lingxi Games to private equity firm Trustar Capital, in a deal expected to fetch more than $2 billion, according to a Reuters report.

Alibaba and Trustar have reached a formal agreement following several rounds of discussions, according to an internal memo sent to Lingxi employees on Monday by CEO Zhou Bingshu and reviewed by the news agency.

Under the agreement, Alibaba will transfer its entire stake in Lingxi Games to Trustar. The value of the transaction and its expected closing date were not disclosed in the memo. Details about regulatory approvals and other conditions were also not provided.

Trustar To Take Over Lingxi Games

Trustar Capital, formerly known as CITIC Capital, is an Asia-focused private equity firm. Zhou said in the memo that Trustar has the industry resources and operational expertise to support Lingxi's next stage of development.

Zhou and Lingxi's management team will continue to lead the company following the transaction, according to the memo. This points to continuity in the studio's operations despite the change in ownership.

Bloomberg, which first reported the internal memo, said the transaction would be worth at least $1.5 billion, citing sources. Reuters, however, reported that Alibaba is expected to receive more than $2 billion, according to a person familiar with the matter.

Why Alibaba Is Selling Lingxi

Alibaba has been reviewing non-core assets as it focuses capital and management resources on strategic areas such as artificial intelligence (AI) and cloud computing.

The company had been looking for a buyer for Lingxi for some time, according to the news agency. The gaming unit had also explored external fundraising in the past.

Lingxi's fundraising process planned for late 2023 stalled after China proposed tighter regulations for the online gaming industry, according to the news agency. The company also underwent a management reshuffle in 2024, with Zhou taking over as CEO after founder Zhan Zhonghui left.

Guangzhou-based Lingxi 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.

It remains unclear whether Alibaba will retain any commercial relationship with Lingxi after the sale, including through publishing, cloud services or technology partnerships.