Alibaba is divesting Lingxi Games to Trustar Capital in a deal valued at more than $1.5B

China-based tech company Alibaba (NYSE: BABA) is divesting its full stake in China-based mobile games developer Lingxi Games to Hong Kong-based private equity firm Trustar Capital, according to an internal staff memo from Lingxi CEO Zhou Bingshu dated Aug 17, 2026 (independently reviewed by Reuters). The memo states plainly that Alibaba will transfer its entire Lingxi stake to Trustar, a 100% transfer, and Trustar confirmed the deal the same day.

Four outlets report two figures. Bloomberg, which first reported the deal on Aug 14, put the price above $1.5B, a figure the Wall Street Journal matched three days later, when it confirmed the memo. Reuters, citing a separate source on the same day as the memo, reported that Alibaba stood to collect more than $2B from the sale, a figure for proceeds, not a stated valuation. Chinese trade press, citing the 21st Century Business Herald, put the price at above $1.5B (RMB 10.1B), a figure widely echoed across Chinese outlets. The memo itself disclosed no value, closing date, or regulatory conditions.

36Kr estimates Lingxi’s annual revenue at $445-594m (RMB 3-4B), extrapolated from Sensor Tower product data rather than reported accounts. Against the reported price of more than $1.5B, the resulting 2.5x-3.4x should be read as an upper bound on the multiple, not a clean EV/Revenue comp.

When the sale process opened in Jun’26, Alibaba approached five potential buyers, including 37 Interactive Entertainment (SZSE: 002555), China Ruyi (HKEX: 0136), Century Huatong (SZSE: 002602) and Giant Network (SZSE: 002558), with a bundled ask of ~$1.0-1.3B (RMB 7-9B) for the whole Lingxi portfolio. National Business Daily reports directly that “the final valuation was pushed from the initial market expectation of RMB 7-9B up to the RMB-10B-plus level”. 

Lingxi Games is a Guangzhou studio Alibaba built over a decade, from its 2014 acquisition of UCWeb through its 2017 acquisition of Guangzhou Jianyue. Five internal studios and the 9game and Jiaoyimao platforms employ roughly 1,200 staff. Its flagship title, the strategy game Three Kingdoms Tactics, developed under a Koei Tecmo (TYO: 3635) license and live since 2019, has surpassed 100 million registered users. 

The studio’s trajectory has shifted toward a maturing live-ops business rather than a growth studio. Sensor Tower’s tracked LTM revenue (Aug’25-Jul’26) skews heavily toward licensed IP, which is roughly 85% of the portfolio. Koei Tecmo’s five titles alone account for ~71%, led by Three Kingdoms Tactics and Nobunaga’s Ambition: Shinsen. IMC Games’ Tree of Savior: Neverland makes up most of the remaining ~14%. Sensor Tower misses China’s third-party Android stores, so its mainland China figure is iOS-only and understates true billings there by 2-2.5x.  

A 2023 reorganization folded Lingxi into Alibaba Digital Media and Entertainment Group. Zhan Zhonghui stepped down as CEO in Mar’24, replaced by Zhou Bingshu, and two more core producers left over the first half of 2026, as the sale process opened.

Trustar Capital is the private equity arm of Hong Kong-based CITIC Capital Holdings, rebranded from CITIC Capital Partners. Trustar manages $10.5B of committed capital and has run a control-buyout strategy across China, Japan, the US, and Europe since 2002. CITIC has backed game companies before, Supercell among them, but Lingxi is its first disclosed control position in the sector.  

For Alibaba, Lingxi is the third non-core divestiture in under two years. The group sold almost all of Intime’s department-store business in Dec’24 for ~$1.0B (RMB7.4B), recording an expected ~$1.3B (RMB 9.3B) loss on the deal, and sold its controlling stake in Sun Art Retail (HKEX: 6808) in Jan’25 for ~$1.5-1.7B (HKD 11.6-13.1B). Reuters frames the pattern as capital being redirected toward AI and cloud, with Alibaba targeting more than $100B in annual cloud and AI revenue from external customers within five years. Alibaba shares rose 0.7% on the day the memo circulated, and a $1.5B Lingxi price tag is under 1% of the group’s market value.

The closest precedent is the same story from five months earlier. ByteDance, another Chinese platform giant that leveraged a massive owned audience to buy its way into games, cut back its Nuverse studio in late 2023. In Mar’26, it sold Shanghai Moonton Technology, developer of the multiplayer battle arena game Mobile Legends: Bang Bang, to Saudi-backed Savvy Games Group for $6B.